Accounting CVS Case Study on Profitability v2
PROFITABILITY RATIOS OF CVS WITH A COMPARISON TO WALGREENS
Contents
Introduction-----------------------------------------------------------------------------------------------------------------------------------3
Gross Profit Margin-------------------------------------------------------------------------------------------------------------------------4
Net Profit Margin---------------------------------------------------------------------------------------------------------------------------7
Measures of Management Performance---------------------------------------------------------------------------------------------9 ROI------------------------------------------------------------------------------------------------------------------------------------------9 ROE------------------------------------------------------------------------------------------------------------------------------------------9 ROA----------------------------------------------------------------------------------------------------------------------------------------11
Conclusion----------------------------------------------------------------------------------------------------------------------------------13
References---------------------------------------------------------------------------------------------------------------------------------15
Introduction
CVS is the second largest pharmaceutical chain in the United States with Walgreens being the largest. Both companies sell prescription drugs, prescription drug services, over-the-counter drugs, beauty products and cosmetics, film and photo finishing services, general and seasonal merchandise, convenience foods and stationary products.
In our effort to evaluate the profitability of CVS, we find it necessary to review the annual report of CVS and also that of Walgreens (their top competitor). By reviewing each company with attention paid to the industry average, we feel that we will be able
Contents
Introduction-----------------------------------------------------------------------------------------------------------------------------------3
Gross Profit Margin-------------------------------------------------------------------------------------------------------------------------4
Net Profit Margin---------------------------------------------------------------------------------------------------------------------------7
Measures of Management Performance---------------------------------------------------------------------------------------------9 ROI------------------------------------------------------------------------------------------------------------------------------------------9 ROE------------------------------------------------------------------------------------------------------------------------------------------9 ROA----------------------------------------------------------------------------------------------------------------------------------------11
Conclusion----------------------------------------------------------------------------------------------------------------------------------13
References---------------------------------------------------------------------------------------------------------------------------------15
Introduction
CVS is the second largest pharmaceutical chain in the United States with Walgreens being the largest. Both companies sell prescription drugs, prescription drug services, over-the-counter drugs, beauty products and cosmetics, film and photo finishing services, general and seasonal merchandise, convenience foods and stationary products.
In our effort to evaluate the profitability of CVS, we find it necessary to review the annual report of CVS and also that of Walgreens (their top competitor). By reviewing each company with attention paid to the industry average, we feel that we will be able
References: Cochran, Phillip. L; CVS makes savvy business move in ending cigarette sales; IndyStar; http://www.indystar.com/story/opinion/2014/02/10/cvs-makes-savvy-business-move-in-ending-cigarette-sales/5367799/ http://csimarket.com/stocks/CVS-Annual-Return-on-Investment-ROI.html http://csimarket.com/stocks/WAG-Annual-Return-on-Investment-ROI.html CVS Annual Report, 2013 http://www.forbes.com/sites/matthewherper/2014/02/05/cvs-to-stop-selling-tobacco-sacrificing-2-billion-in-sales-for-public-health-and-future-growth/ http://www.investopedia.com/articles/basics/05/052005.asp http://www.investopedia.com/terms/e/eps.asp Morningstar.com Msnmoney.com Walgreens Annual Report, 2013