Walgreens Co.
It is crucial when performing an analysis of financial statements to consider the footnotes to recognize the flesh out of a company which are not stated in the basic 10K annual report. These details can be dod to re-compute data and reveal cultivation which is not directly stated in the statements. After analyzing the notes for Walgreens (WAG) management presents the company in a generally buttoned-up manner allowed by GAAP but has certain aspects which demo some aggressive reporting of information.
Walgreens operates their inventory on a last- in, first- out method to measure their inventory and cost of goods sold. This is a conservative accounting choice for management during the menstruation period of rising prices. Even though we are not experiencing as drastic of price developments as in the retiring(a) because of the economic environment, last in first out will portray a more(prenominal) conservative gross income and balance sheet. It is also beneficial for valuate purposes because of the increase of cost of goods sold. As a result of the increase of cost of goods sold, income before taxes declines and Walgreens pays less income tax than if they were to use the first-in, first-out method. Traditionally, companies using LIFO are valued more exceedingly than those who use FIFO during periods of rising prices.
Walgreens also offers analysts the LIFO Reserve, which is the difference between what the inventory is using LIFO as opposed to if FIFO was used. As of 2007 and 2008, Walgreens inventories would have been great by $1,067 million $969 million respectively using a FIFO accounting method.
Walgreens primary competitor, CVS, uses a faction of three inventory methods for each of their different business segments. They give FIFO for their CVS/Pharmacy locations, average cost for their mail function and specialty pharmacies, and are converting their Longs Drug Stores to the retail method in 2009. This is a very unique method which is...If you want to bunk a full essay, order it on our website: Orderessay
If you want to get a full essay, wisit our page: write my essay .
No comments:
Post a Comment