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EVA Calculation and comparison - Essay Example

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Summary
Recently companies in different markets have been evaluated by their EVA (Economic Value Added). EVA has been added to the other information charted when reviewing the financials of a company. EVA gives an estimate of true economic value. The higher an EVA score is the better the level of resource utilization1…
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EVA Calculation and comparison
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Download file to see previous pages The chart below indicates that Walgreens EVA scores have been on the rise in the past three years. CVS' EVA scores have been falling and indicate that CVS needs to examine its resource utilization methods and decide what to do turn its scores around.
The goal of any organization is to lower its costs while increasing profitability. There are many methods organizations can use. In the three year window examined (2004, 2005, 2006). Initially Walgreens' total assets were slightly higher than CVS'. Then CVSs were reported as slightly higher than Walgreens. Walgreens consistently outspends CVS for cost of goods sold. The higher the cost of goods sold the lower the profits. But, Walgreens consistently reports 10% on ROA (return on assets). CVS reports between 6.3% and 8% ROA.
Walgreens has a bigger share of the market and consistently outperforms CVS. But, the difference is not so big that n any one year CVS could come out on top. The current earnings are so close that a good year could put CVS ahead. Both pharmacies could benefit from strategies to differentiate them in the market and draw in a greater share of the market in pharmacy sales. Walgreens has begun doing so by advertising itself as "your pharmacy" and "there's my pharmacy next to work""there's my pharmacy close to home"(TV commercials).
...
Sales
$37,006,200
Cash
$513,400
N/P
$774,200
COGS
$27,105,000
A/R
$2,080,700
A/P
$3,988,900
Gross
$9,901,200
Inventory
$5,719,800
Accrd Exp
$59,500
Prepaids
$78,800
SG&A
$7,881,700
TTL Cur
$8,392,700
TTL Cur
$4,822,600
EBIT
$2,019,500
PP&E
$3,952,600
LTD
$1,594,100
Interest
$110,500
GoodWill
$1,789,900
TTL Liabilities
$6,416,700
EBT
$1,909,000
intangible
$802,200
Other Assets
$223,500
Equity
$535,500
33.96%
Tax
$648,300
LTA Charges
$122,500
EAT
$1,260,700
TTL Assets
$15,283,400
TTL Liab & Equity
$6,952,200
ROA
8.20%
ROE
235.40%
Debt
$2,368,300
0.8200
0.01
0.82%
equity
$535,500
0.1800
1.4894
26.81%
$2,903,800
27.63%
18.25%
EVA
-10.05%
Table 2
Table 3
31-Dec-03
Assets
Liabilities & Equity
Sales
$26,588,000
Cash
$843,200
N/P
$3,166,000
COGS
$26,588,000
A/R
$1,601,700
A/P
0
Gross
$26,588,000
Inventory
$4,016,500
Accrd Exp
$323,200
Prepaids
$35,100
SG&A
$5,439,400
TTL Cur
$6,496,500
TTL Cur
$3,489,200
EBIT
$1,423,600
PP&E
$2,542,100
LTD
$1,032,100
Interest
$48,100
GoodWill
$889,000
TTL Liabilities
$4,521,300
EBT
$1,375,500
Intangible
$403,700
Other Assets
$211,800
Equity
$207,800
38.40%
Tax
$528,200
LTA Charges
0
EAT
$847,300
TTL Assets
$10,543,100
TTL Liab & Equity
$4,729,100
ROA
8.00%
ROE
407.70%
Debt
$4,198,100
0.9500
0.010639
1.01%
equity
$207,800
0.0500
0.3538
1.77%
$4,405,900
2.78%
1.71%
EVA
6.29%
Works Cited:
Ecoach. EVA. Retrieved 2007-02-09 ...Download file to see next pagesRead More
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