Walgreens Financial Statements and Financial Ratios Analyzed from 2015 to 2019
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 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 |
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| 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 |
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| 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 |
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| 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 |
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| 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 |
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| 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 | |||