Walgreens Financial Statements and Financial Ratios Analyzed from 2015 to 2019

Expert Walgreens Financial Report & Analysis by Paul Borosky, MBA.

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Hey All,

Thanks for visiting my Walgreens Financial Report page. On this page, you will be able to find preliminary information about Walgreens current financial performance as well as some historical track records and trends. 

For a more detailed examination of Walgreens financial performance, please check out the "Financial Report".  In this report, written by myself, Paul Borosky, MBA., Doctoral Candidate, and published author, you will find:

  • Summarized income statement for the last 5 years.
  • Summarized balance sheet for the last 5 years.
  • Summary analysis by myself of important income statement, balance sheet, and financial ratio trends and other happenings.
  • Five year’s worth of over twenty common financial ratios presented with formulas, calculations, and analysis tips for each ratio.
  • Line by line description, explanation, and analysis tip for most financial statement line items and financial ratios.
  • Professional financial analysis tips provided in each section to help YOU conduct your OWN financial analysis!
  • Each section includes an “in other words” segment.  This is were I use plain English to explain concepts.

Enjoy the preliminary information and for a more detailed analysis, buy the financial report!

Sincerely,

Paul, MBA.

Sample Financial Report

Sample Financial Report by Paul Borosky, MBA.
Financial Report Sample 2

Sample Table of Contents for Financial Reports

Table of Contents

Page Count: 88 Pages

  • Disclaimer 3
    Acknowledgments 4
    Forward 5
    About the Author 7
    Company Summary 8
    Financial Statement Introduction 10
    Income Statement 11
    Walmart’s Income Statement – Summary Analysis 12
    Income Statement Discussion 12
    Balance Sheet 21
    Balance Sheet – Summary Analysis 22
    Balance Sheet Discussion 23
    Financial Ratios 38
    Liquidity Ratios 39
    Liquidity Ratios - Summary Analysis 39
    Liquidity Ratios Discussion 40
    Current Ratio 40
    Quick Ratio 41
    Cash Ratio 42
    Other Liquidity Ratios 42
    Net Operating Working Capital 42
    Asset Ratios 44
    Asset Utilization Ratios - Summary Analysis 45
    Asset Utilization Ratios Discussion 46
    Total Asset Turnover 46
    Fixed Asset Turnover 46
    Days Sales Outstanding 47
    Inventory Turnover 48
    Accounts Receivable Turnover 49
    Accounts Payable Turnover 50
    Other Asset Ratio Calculations 50
    Working Capital Turnover 50
    Average Days in Inventory 51
    Average Days Payable 51
    Profitability Ratios 52
    Profitability Ratios - Summary Analysis 53
    Profitability Ratios Discussion 53
    Return on Assets (ROA) 53
    Return on Equity (ROE) 54
    Profit Margin 55
    Gross Profit Margin 56
    Operating Profit Margin 56
    Basic Earnings Power 57
    ROCE 57
    Capital Employed 58
    Debt Ratios 59
    Walmart’s Debt Ratios - Summary Analysis 59
    Debt Ratios Discussion 60
    Long-Term Debt Ratio 60
    Debt to Equity Ratio 61
    Times Interest Earned 61
    WACC 63
    Book Value of WACC 63
    Free Cash Flow (FCF) 65
    Free Cash Flows – 2016 - 2020 65
    Free Cash Flows – 5 Year Projections 66
    Income Statement – Projections for 5 years 67
    Income Statement – 5 Year Projections 67
    Balance Sheet – Projections for 5 years 68
    Balance Sheet – 5 Year Projections 68
    Company Valuation and Intrinsic Stock Price 70
    Appendix 1: Summarized Income Statement 71
    Appendix 2: Income Statement – Percent of Sales 72
    Appendix 3: Income Statement – Year over Year Growth 73
    Appendix 4: Summarized Balance Sheet 74
    Appendix 5: Balance Sheet as Percent of Total Assets 76
    Appendix 6: Summarized Financial Ratios 77

Brief Summary: Walgreens Boots Alliance, INC. (WBA)

The Walgreens Boots Alliance Inc., or simply Walgreens (WBA), as their headquarters in Deerfield, Illinois.  The organization competes in the healthcare sector.  Specifically, the pharmaceutical retail industry.  At present, Walgreens employs about 230,000 individuals based on Yahoo finance provided information.

Financially speaking, the organization maintains a $35.1 billion market.  Yahoo Finance reports that Walgreens has a beta of .55.  This indicates that the company is less risky as compared to the overall market.  However, based on their slide in stock price, I would say the company is almost negatively correlated to the market.  In the last 52 weeks, Walgreens stock has fluctuated between $36.65 to $64.50.  The company does pay dividends.  Walgreens dividend yield the last 12 months was 4.64%.  The next dividend payout date is in August.

Walgreens Financial Report Sources

“Walgreens 2019 Company Analysis… For Beginners: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by, Paul Borosky, MBA. and owner of Quality Business Plan.  In this report, I used Walgreens 2018 10k, 2017 10k annual report, 2016 10k annual report, 2015 10k annual report, and 2019 10k annual report as the basis for information gathering. 

 

Section 1: Walgreens Income Statement Analyzed 2015 to 2019

In this section, I walk through a broad definition as to what an income statement is and why it is important.  From this, I then discuss and define income statement line items, such as revenues, gross profits, etc. in detail.  After each line item is defined and discussed, I finally offer a summary analysis of Walgreens important income statement line item trends from 2015 to 2019, in most cases.

Walgreens Inc. Revenue Growth.

Walgreens had revenues of approximately $103 billion in 2015.  The next two years, the company would moderately increase the revenues in the 2017 with about $118 billion.  However, in the last two years, ending in 2019, the firm would substantially increase the revenues ending 2019 with revenues of approximately $136.8 billion.  Surprisingly though, the organizations net profits have actually decreased as compared to the revenues.  This is more than a little bit concerning from an investor’s perspective.

Walgreens 2019 Income Statement

Column1 2019 2018 2017 2016 2015
Revenues                  136,866                  131,537                  118,214                  117,351                    103,444
COGS                  106,790                  100,745                    89,052                    87,477                      76,691
Gross Profit                    30,076                    30,792                    29,162                    29,874                      26,753
SG&A                    25,242                    24,694                    23,813                    23,910                      22,400
Depreciation                      2,038                      1,770                      1,654                      1,718                        1,742
R & D
Other
Operating Expenses                    25,078                    24,503                    23,677                    23,873                      22,085
EBIT                      4,998                      6,289                      5,485                      6,001                        4,668
Other Income
Interest Expense                         704                         616                         693                         596                           605
EBT                      4,527                      5,975                      4,853                      5,144                        5,311
Taxes                         588                         998                         760                         997                        1,056
Net Income                     3,962                     5,031                     4,101                     4,191                      4,279

Section 2: Walgreens Balance Sheet Analyzed from 2015 to 2019

For Walgreens balance sheet, I again go through each important line item from the balance sheet.  In reviewing each line item, I will define their balance sheet line item, such as cash, property, plant and equipment, and liabilities between 2015 to 2019.  Next, I then offer a summary analysis of their important balance sheet line items.

Walgreens Inc. Cash.

Walgreens Inc. ended 2019 with approximately $3 billion with cash on hand.  In the next year, Walgreens would substantially increase their cash position and in 2016 with about $9.8 billion in the bank.  However, the organization would then continually drop in their cash position ending 2019 with $1 billion in the bank.  The substantial reduction in cash may be due to an acquisition.  Also, the company may have taken out significant debt in 2016, which drove up their cash position.

Walgreens 2019 Summary Balance Sheet

Column1 2019 2018 2017 2016 2015
Cash                        1,023                       785                    3,301                    9,807                    3,000
Short Term Investment
Account Receivable                        7,226                    6,573                    6,528                    6,260                    6,849
Inventory                        9,333                    9,565                    8,899                    8,956                    8,678
Other
Current Assets                    18,700                17,846                19,753                25,883                19,657
Net PPE                      13,478                  13,911                  13,642                  14,335                  15,068
Goodwill                      16,560                  16,914                  15,632                  15,527                  16,372
Other
Total Assets                    67,598                68,124                66,009                72,688                68,782
Accounts Payable                      14,341                  13,566                  12,494                  11,000                  10,088
Accrued Expense                        5,474                    5,862                    5,473                    5,484                    5,225
Accrued Taxes                           216                       273                       329                       206                       176
Notes Payable                        5,738                    1,966                       251                       323                    1,068
LT Debt - Current
Other
Total Current Liabilities                      25,769                  21,667                  18,547                  17,013                  16,557
LT Debt                      11,098                  12,431                  12,684                  18,705                  13,315
Other
Total Liabilities                    43,446                41,435                37,735                42,407                37,482
Common Stock                             12                         12                         12                         12                         12
Treasury                      19,057                  15,047                    9,971                    4,934                    3,977
Retained Earnings                      35,815                  33,551                  30,137                  27,684                    2,589
Other
Total Equity                    24,152                26,689                28,274                30,281                31,300
Total Equity & Liability                    67,598                68,124                66,009                72,688                68,782

Section 3: Walgreens Financial Ratios Analyzed from 2015 to 2019

For this section, I have chosen several different financial ratios to review for Walgreens from 2015 to 2019.  In reviewing each of their financial ratios, I first start with defining the financial ratio.  Next, I supply the financial formula for calculating the specific ratio.  Finally, I offer a brief analysis of their important Financial ratios. 

Walgreens Inc. Current Ratio.

In 2015, Walgreens had a current ratio of approximately 1.19.  Because the company does deal with retail, the organization should employ a lower current ratio as compared to other industries.  For example, Walmart continuously has a current ratio well below 1.0.  This is because these types of organizations continually generate cash on a daily basis.  This enables the firm to optimize its current assets at a higher rate as compared to other industries.  In my most humble of opinion, Walgreens needs to employ similar strategies as compared to other retail industry competitors.

Walgreens Inc. Total Asset Turnover.

Walgreen's total asset turnover ended 2015 at 1.50.  In the next four years, Walgreens will continually improve their total asset turnover ending 2019 with 2.02.  This indicates that Walgreens management teams are taking steps to continually increase their total asset utilization.  Also, the firm may be liquidating underperforming assets to help improve this ratio on a continuous basis.

Walgreens Inc. Return on Assets.

Walgreen's return on assets ended 2015 at 6.22%.  In the next four years, Walgreens would fluctuate between 7.39% in 2018 to 5.77% in 2016.  The significant fluctuation of return on assets shows that the organization does not have a coherent strategy to continually improve and optimize the usage of assets from the perspective of revenue generation.  To improve on this ratio, the organization may wish to close down underperforming stores or take action to improve inventory holding practices.

Walgreens Inc. Debt ratio.

Walgreens ended 2015 with the debt ratio of 19.36%.  In the next year, the organization’s debt would climb to 25.73%.  Fortunately though, the last three years, Walgreens has taken significant steps to reduce their current debt ratio.  The steps resulted in a debt ratio of 16.42% in 2019.  In my opinion, this debt ratio may be an optimal level for the organization.  Going any lower may jeopardize the company’s ability to exploit right off opportunities for interest payments.  Also, additional funds that may be paid to paying down the debt could be used for expansion purposes.

Walgreens 2019 Liquidity Ratios

Ratios 2019 2018 2017 2016 2015
Current Ratio                           0.73                    0.82
Cash Ratio                           0.04                    0.04
Quick Ratio                           0.36                    0.38
Net Working Capital                       (2,449)                (2,778)

Walgreens 2019 Asset Utilization

Ratios 2019 2018 2017 2016 2015
Total Asset Turnover                           2.02                    1.93
Fixed Asset Turnover                         10.15                    9.46
Days Sales Outstanding                         19.27                  18.24
Inventory Turnover                         14.66                  13.75
Accounts Receivable Turnover                         18.94                  20.01
Working Capital Turnover                       (55.89)                (47.35)
AP Turnover                           9.54                    9.70
Average Days Inventory                         31.90                  34.65
Average Days Payable                         49.02                  49.15
Cash Conversion Cycle                           2.15                    3.74

Walgreens 2019 Profitability Ratios

Ratios 2019 2018 2017 2016 2015
Return on Assets 5.86% 7.39%
Return on Equity 16.40% 18.85%
Net Profit Margin 2.89% 3.82%
Gross Profit Margin 21.97% 23.41%
Operating Profit Margin 3.65% 4.78%
Basic Earning Power 7.39% 9.23%
ROCE 11.95% 13.54%
Capital Employed                       41,829                46,457
ROIC 39.43% 47.05%

Walgreens 2019 Long-term Debt

Ratios 2019 2018 2017 2016 2015
Debt Ratio 16.42% 18.25%
Debt/Equity 45.95% 46.58%
Times Interest Earned                           7.10                  10.21