Cvs Health Corporation Vs Walgreens

CVS Health Corporation, formerly known as CVS Caremark Corporation, is a publicly traded corporation specializing in pharmaceutical needs headquartered in Woonsocket, Rhode Island. It has over 9,700 retail stores in 49 states, Washington D.C., Puerto Rico, and Brazil. 1,100 of these locations include a MinuteClinic. It was recently announced that CVS Health purchased Aetna, an insurance company. CVS Health was the first pharmacy to stop selling tobacco and other related products on September 3, 2014 (CVS Health At a Glance).
Walgreens Boots Alliance is also a publicly traded corporation specializing in pharmaceutical needs headquartered in Deerfield, Illinois. It has 8,100 locations in all 50 states, Washington D.C., Puerto Rico, and the U.S.

CVS Health’s numbers have remained the same for the past two years, while Walgreens’ have both fallen 0.02. As such major corporations, they both have net revenues in the millions, but for every dollar that CVS makes, it only retains $0.03 towards net income for every dollar of sales; Walgreens retains $0.25, a one cent difference from 2015. CVS is much more efficient at generating sales than Walgreens, shown by its asset turnover ratio of 1.90 compared to Walgreens’ 0.06. For the gross profit margin, CVS makes an average of $0.16 without taking into consideration overhead costs of running a business. Walgreens makes an average of $0.25. Both of these calculations fell 0.01 from 2015 to 2016. Earnings per share is one of the best indicators of profitability for a company, as it shows the strength of the company’s stock and profits. CVS’ EPS grew from $4.65 in 2015 to $4.93 in 2016. On the other hand, Walgreens’ 2015 EPS of $4.05 was well below CVS’ and fell even further to $3.85. Another telling profitability ratio is operating expenses to sales. CVS spends 10% of its sales revenue on overhead costs, while Walgreens doubles the value, spending 20%. CVS has 1,600 more locations than Walgreens, yet is still able to spend half of what Walgreens does. Overall, Walgreens and CVS have similar

Some of CVS’ liquidity success is average days in inventory; it shrunk from 37.33 days to 35.31. Walgreens suffered in this regard, as what used to sit on a shelf for 25.59 days in 2015 now spends more than a week longer unsold with 36.79 days. This 2016 value is relatively close to CVS’ but the massive time jump shows a discrepancy in what enters the retail stores as inventory and how much of it leaves the store. The inventory turnover ratio also went in favor of CVS, as can be expected from the average days in inventory result. CVS’ increased from 9.78 to 10.34. Walgreens’ fell from an impressive 14.26 to 9.92. Again, the 2016 values are similar for both corporations but CVS was more successful, as it was able to increase inventory turnover, as Walgreens slowed its turnover. Other than these two ratios, which showed that Walgreens suffered from inventory levels and control in 2016, Walgreens showed its ability to overpower CVS in regards to accounts receivables. A higher accounts receivable turnover is more desirable, as it shows a strong ability to collect liabilities. Although Walgreens’ fell from 20.55 to 17.90 in 2016, the ending amount is higher than CVS’ growth from 14.21 to 14.76. The average collection periods followed the same trends, as Walgreens’ numbers became less favorable, but still outrank CVS’; Walgreens increased its period from 17.76 to 20.39