Cvs Annual Report Essay

Executive Summary/Company tale/Products and ServicesCVS/ chemists shop has shown a agreeable crop for the last trine social classs. ternary years ago CVS/ pharmaceutics has incorporated with doggeds chemists and C armark to form the largest retail apothecarys shop chain in the United States. CVS/ pharmacy- CVS/ pharmacy began operations in 1963, and added the pharmaceutics division in 1967. In 2007, CVS merged with Caremark Rx, Inc.Finally, in 2008, CVS bought the Longs Drug Store chain. CVS has all over 7000 stores(Cvs.com, 2010). At the end of 9 months of 2010, the confederacy has befogged 9.25% against 2009 boodle income. However, the company has increased their assets and liabilities by .1% against 2009 figures(Cvs.com, 2010). As the company stands now in tailors, Net revenues for this 7,100-store drugstore retailer were $23.9 trillion for Q3 2010, down 3.1% from $24.6 billion in the prior(prenominal) years period.Poor death penalty by the companys chemists shop Services segmentits revenues dropped 8.5%, to $11.9 billionwas a major contributor to the companys woes. CVS Retail pharmacy segment revenues rattling increased 4.1%, with inwardness same-store utter(a) revenue arise 2.5%(Trendwatch, 2010). CVS/ pharmaceutics is in the process of transitioning their leading at CEO.tom turkey Ryan will be stepping down at the end of the year as CEO, and Larry Merlo will be promoted to CEO. tom Ryan has been the CEO of CVS/ chemists shop Inc. since 1994, and it has been the consistency at the top that has lead to the expansion of CVS/chemists as being largest retail drugstore chain in the United States. without delay that Toms tenure is attack to a close, a new cover isoccurring for the corporation with Larry Merlo taking the helm. Competitor depth psychologyIn the retail pharmacy industry, in that respect are only trio arrant(a) pharmacy cockeyeds CVS/ drugstore, Walgreens, and Rite-Aid. Pure pharmacy firms are pharmacy retailers whos e business is built most the pharmacy. Wal-Mart, Kroger, and local grocery stores nonplus pharmacies as an extension of their business plan, but it is non the focus of their company. CVS/chemists and Walgreens consecrate been battling over the top position for years, and Rite-Aid has been ranked at a steady third in the market place.Walgreens- Walgreens is CVS/Pharmacys school principal competitor. Founded in 1901, Walgreens is considerably older. Unlike CVS/Pharmacy, Walgreens began with the pharmacy department. With 6000 stores, Walgreens is smaller than CVS. In 2010, Walgreens has increased gross revenue against last year by 6.4%, and shed light on earnings by 4.2%(Walgreens.com, 2010). Moreover, they nourish affix 36 straight years of sales gains, and 35 straight years of dividend payments(Walgreens.com, 2010).Finally, Walgreens has affix cyberspace earnings for 5 neat years. Despite Walgreens smaller size, it has a large market share at 31.2% compared to CVS/Pharmac ys 25%(Wikinvest.com, 2010). The last 10 years has been the first decade that a Walgreens family fragment was not at the helm of the Walgreens Pharmacy chain. Charles Walgreens invite a go at itd from the CEO position in 1998, but stayed on a member of the board of directors. Mr. Walgreens will officially retire for the company this year.Gregory D. Wasson is the Chairman of the Board and foreland Executive Officer. Mr. Wasson has worked with Walgreens for 31 years. In conclusion, Walgreens & CVS/Pharmacy are the giants in retail pharmacy. Their powers, weaknesses, successes, and failures have brought them to a virtual dead heat. The affair of this research is analyze the financial strength of twain to determine which is in the topper financial health. Common Size StatementsWe will first compare CVS/Pharmacy and Walgreens through and through common size financial statements. honey oil size financial statements allow for comparisons to be made between companies of different si zes and volumes in order to see the true performance. CVS/Pharmacy has over 7000 stores, and Walgreens Pharmacy only has 6000 stores.The struggle in size will have animpact on expense, revenue, and income. Every company plans to get the most out of every(prenominal) dollar spent. Consequently, we will be canvas the their financial performance from 2007-2009.From the beginning, Walgreens has yielded a repair gross net wage by an fairish of 8% over CVS/Pharmacy. Gross clear is the amount left over later cost of goods sold is taken from revenue. Although, both have been steady with their percentage gross profit, CVS/Pharmacy 21% & Walgreens 28%, Walgreens has gained much(prenominal).However, Walgreens celebration is short lived because the balance statement is more than gross profit. In fact the 8% edge in gross profit they gave back in operate expenses. Walgreens in operation(p) expenses took, on average, 22.5% away from their total revenue. CVS/Pharmacy run expenses to ok only 14.5% away from their total revenue. Moreover, different indicators of drive away on enthronization to the company are high for CVS/Pharmacy than Walgreens.CVS/Pharmacy has had a high operating income than Walgreens since 2007. For the last two years CVS/Pharmacy has posted high income forwards taxes than Walgreens. Finally, the biggest cut difference between the two firms is that CVS/Pharmacys net income has increased three years in a row, turn Walgreens net income has steadily decreased three years in a row. As a company, CVS/Pharmacy received a 20% gross profit margin.The bordering biggest payment went to operating expenses at 14.12%. by and by the expenses, income before taxes and operating profit scotch for 13% and net income accounts for nearly 4%. In 2009 alone, Walgreens gross profit and operating expenses nearly cancel each other out. There is only a 4% variance between gross profit and operating expenses for Walgreens.Operating profit and income before taxes accounts for only 10% of the revenue, while Walgreens net income accounts for barely over 3%. On the key financial statements, Walgreens performance has been decrease over the last three years, and CVS/Pharmacys performance has risen.The reason shag the growing strength of CVS/Pharmacy has been the general, legitimate financial growth. This will be illustrated by the financial ratios. Liquidity is the firms ability to meet its rate of flow obligations(Marshall, McManus, Vielle, 2010). workings chapiter is the excess of a firms current assets over its current liabilities(2010).In this case, Walgreens has higher working capital than CVS/Pharmacy. On other testings of liquidity,Walgreens out performs CVS/Pharmacy. Walgreens has a higher current ratio, acid test ratio, and they turn over their assets 8 more times a year than CVS/Pharmacy. Although Walgreens has yielded their low net income in three years, they have a high comparable liquidity. Moreover, the higher net incom e for CVS/Pharmacy has not translated into higher liquidity. However, the increased in income has translated into a higher inventory turnover for CVS/Pharmacy. ConclusionThe findings of this subject are illustrating the transition in the marketplace between CVS/Pharmacy and Walgreens. For the last 20 years, these retail pharmacy firms have battled for subordination in the industry. Over the last decade, CVS/Pharmacy has had one Chief Executive Officer, Tom Ryan. However, since Tom Ryan took over in 1999, Walgreens has had 3 CEO changes. The result of inconsistency in their leadership has translated to a lower return on investment.Walgreens has higher liquidity, but they have shown three years of decreasing net income. As a result, they are getting weaker as an organization. However, CVS/Pharmacy has shown consistent growth over the last three years. Their increase strength has been represented by their purchases of Longs Pharmacy and Caremark. It is my conclusion that this trend will continue