Common-size Consolidated Income Stamen Analysis of Walgreen - Essay Example

Walgreen has reported total; Revenue US$ 72.217 billion (2013)Operating income US$ 3.94 billion (2013)Net income US$ 2.45 billion (2013)Total assets US$ 35.481 billion (2013)Total equity US$ 19.454 billion (2013)Calculating the; ROE, net assets/shareholders equity= 13%ROA, net income/ average total assets = 7.

1%The profit margin, total revenue/ gross profit = 3%Total asset turnover, average assets/ total assets= 97.2%Equity multiplier, total assets/ stock equity= 1.824Walgreen has a great challenge handling its biggest rival CVS Caremark also a drug retailer in the US that operates over 7700 drugstores. Both of these companies are neck to neck in the drug industry market share. CVS Caremark’s retailers have a strategy where they are presenting prescription drugs at low a cost which brings them great competition with Walgreen.

CVS Caremark’s reported totals of Revenue of US$ 126.761 billion (2013)Operating income of US$ 8.037 billion (2013)Net income of US$ 4.592 billion (2013)Total assets of US$ 71.526 billion (2013)Total equity of US$ 37.938 billion (2013Calculating the; ROE, net assets/shareholders equity= 12%ROA, net income/ average total assets = 6.6%The profit margin, total revenue/ gross profit = 5%Total asset turnover, average assets/ total assets= 96.3%Equity multiplier, total assets/ stock equity= 1.885Walgreen has a higher return on equity thus more efficient in the use of shareholders wealth in the generation of profits.

Similarly, Walgreen has a high return on an asset that means the company can adequately utilize its asset better to generate profits. On the other hand, CVS Caremark makes higher profits from its sales than Walgreen. Common-size consolidated income stamen analysis Walgreen CVS Caremark’s12 months ended Aug 31, 2013Aug 31, 2012Net sales100.00%100.00%Cost of sales-70.76%-69.60%Gross profit29.24%30.40%Selling, general and administrative expenses-24.29%-25.56%Gain on sale of business0.

03%–Equity earnings in Alliance Boots0.48%–Operating income5.46%4.84%Interest expense, net-0.23%-0.12%Other income (expense)0.17%–Earnings before income tax provision5.39%4.71%Income tax provision-2.00%-1.74%Net earnings3.39%2.97%Net earnings attributable to non-controlling interests––Net earnings attributable to Co.3.39%2.97