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Interpreting Financial Results: Walgreens Corporation

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Interpreting Financial Results: Walgreens Corporation
Walgreens Corporation is a global pharmaceutical company specializing in the wholesale and retail of prescription drugs and health and wellbeing products. The company boasts of a wide distribution network for pharmaceuticals, as well as the title of the largest purchaser of prescription medicine in the world. As of December 2014, the company is now a wholly owned subsidiary of Walgreens Boots Alliance, after a merger with Alliance Boots. Using ratio analysis, this paper seeks to analyse the financial statements of Walgreens Corporation and interpret these results against historical data, as well as industry benchmarks. Particular emphasis is on the balance sheet and the income statement from the year 2013 to 2015.
(B = Billions)
1. Liquidity ratios
a) …show more content…

2013 = 11.87B – 8.88B = 2.99B
2014 = 12.24B – 8.9B = 3.34B
2015 = 19.66B – 16.56B = 3.1B
b) Current Ratio = Current Assets/Current Liabilities
This ratio shows the relationship between current assets relative to the company’s current liabilities. A ratio of 1:1 means that the company has no working capital.
2013 = 11.87B/8.88B = 1.34
2014 = 12.24B/8.9B = 1.38
2015 = 19.66B/16.56B = 1.19
c) Quick/Acid Test Ratio = (Cash & Short term investments + Accounts Receivables)/Current Liabilities
This ratio shows the amount of assets available that the company can quickly convert to cash.
2013 = (2.11B + 2.63B)/8.88B = 0.53
2014 = (2.65 + 3.22B)/8.9B = 0.66
2015 = (3.04B + 6.85B)/16.56B = 0.6
Liquidity Ratios Walgreens Sector: Drug retailers Industry: Customer services 2015 2014 2013 2015 2014 2013 2015 2014 2013
Current Ratio 1.19 1.38 1.34 - 1.23 1.32 - 1.13 1.15
Quick Ratio 0.60 0.66 0.53 - 0.63 0.66 - 0.59

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