Walgreens Case Study

Walgreens appears to be well below those within the same industry. CVS on the other hand is above the industry average of %9.52. Further analyzing we see a large change in the DOH from 2010-2012 in both companies. May this show a possible trend that consumers are shopping at these stores? Also we can see this with the ratios of both companies increasing as well, however the average stays approximately the same.

3. What inventory method does CVS and Walgreens use? Page 295

4.Are there any major fluctuation or difference to comparators, give reasons for the fluctuations or differences using what you know regarding the industry, the economy, and linking what you have read in the management discussion and analysis as well as the Notes to the

CVS specifically changed the way that the accounted for certain type of products. The specific products being RX. The RX portions of CVS were valued at a lower cost of the weighted average cost method in order to bring all of the pharmacies under a collective appraisal technique. The practices of the FIFO method were used prior to January 1st, 2012. Remarkably, after looking at the illustration 6-12, we see that 45% of the major U.S. Companies use this method. (Kimmel, pp.294). CVS seems to think that a weighted average cost technique is preferable due to the precise abilities that it allows. In regards to the assessment of Walgreens Annual report. The managements discussed how exactly the inventory is supported with internal funds. They also discussed how the cost of healthcare has amplified, with this amplification the costs of many drugs including generic brand pharmaceuticals will indefinitely affect Walgreens gross margin. Walgreens also felt that these prices will be elevated throughtout 2015 and beyond. These increases will directly impact the ability of Walgreens to reduce costs to consumers. Furthermore, RX increases are not the only aspect that will need addressed by Walgreens. In reality Walgreens is a retail store that also sells many other items to consumers, which of course come as a cost to deliver these products to