Cvs Annual Report Essay

Executive summary/Company History/Products and runCVS/ pharmaceutics has shown a agreeable festering for the finishing three geezerhood. Three geezerhood ago CVS/ chemists shop has co-ordinated with Longs Pharmacy and C aremark to form the largest sell drugstore chain in the join States. CVS/Pharmacy- CVS/Pharmacy began operations in 1963, and added the chemists department 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 stop of 9 months of 2010, the company has lost 9.25% against 2009 final income. However, the company has increase their assets and liabilities by .1% against 2009 figures(Cvs.com, 2010). As the company stands now in rows, Net revenues for this 7,100-store drugstore retailer were $23.9 billion for Q3 2010, down 3.1% from $24.6 billion in the prior years period.Poor performance by the companys Pharmacy Services segmentits revenues dropped 8.5%, t o $11.9 billionwas a major contributor to the companys woes. CVS Retail Pharmacy segment revenues actually increased 4.1%, with total same-store uncouth revenue climbing 2.5%(Trendwatch, 2010). CVS/Pharmacy is in the process of transitioning their leadership at CEO. turkey cock 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/Pharmacy Inc. since 1994, and it has been the consistency at the top that has lead to the expansion of CVS/Pharmacy as being largest retail pharmacy chain in the United States. Now that Toms tenure is coming to a close, a new dawn is occurring for the tidy sum with Larry Merlo taking the direct. Competitor AnalysisIn the retail pharmacy industry, at that place are only three pure pharmacy firms CVS/Pharmacy, Walgreens, and Rite-Aid. Pure pharmacy firms are pharmacy retailers whose business is built around the pharmacy. Wal-Mart, Kroger, and local market place stores hav e pharmacies as an extension of their business plan, but it is not the snap of their company. CVS/Pharmacy and Walgreens have 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 chief 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 revenue sales against last year by 6.4%, and net moolah by 4.2%(Walgreens.com, 2010). Moreover, they have posted 36 straight years of sales gains, and 35 straight years of dividend payments(Walgreens.com, 2010).Finally, Walgreens has posted net earnings for 5 consecutive years. Despite Walgreens smaller size, it has a bigger market section at 31.2% compared to CVS/Pharmacys 25%(Wikinvest.com, 2010). The last 10 years has been the offset decade that a Walgreens family member was not at the he lm of the Walgreens Pharmacy chain. Charles Walgreens retired 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 moderate of the Board and Chief Executive Officer. Mr. Wasson has worked with Walgreens for 31 years. In proof, Walgreens & CVS/Pharmacy are the giants in retail pharmacy. Their strengths, weaknesses, successes, and failures have brought them to a virtual deathlike heat. The purpose of this research is analyze the pecuniary strength of both to check into which is in the best financial health. Common Size StatementsWe will first compare CVS/Pharmacy and Walgreens through common size financial statements. super acid size financial statements allow for comparisons to be made between companies of antithetic sizes and volumes in order to see the true performance. CVS/Pharmacy has over 7000 stores, and Walgreens Pharmacy only has 6000 stores.The differ ence in size will have an  force on expense, revenue, and income. Every company plans to get the most out of both dollar spent. Consequently, we will be comparing the their financial performance from 2007-2009.From the beginning, Walgreens has yielded a better gross wampum by an average of 8% over CVS/Pharmacy. Gross shekels is the amount left over after personify 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 more.However, Walgreens celebration is short lived because the vestibular sense statement is more than gross profit. In fact the 8% ring in gross profit they gave back in in operation(p) expenses. Walgreens operating expenses took, on average, 22.5% remote from their total revenue. CVS/Pharmacy operating expenses took only 14.5% away from their total revenue. Moreover, other indicators of return on investment to the company are high for CVS/Pharmacy than Walgreens.CVS/Pharmacy has had a higher operating income than Walgreens since 2007. For the last two years CVS/Pharmacy has posted higher income before taxes than Walgreens. Finally, the biggest trend difference between the two firms is that CVS/Pharmacys net income has increased three years in a row, mend Walgreens net income has steady decreased three years in a row. As a company, CVS/Pharmacy received a 20% gross profit margin.The nigh biggest payment went to operating expenses at 14.12%. After the expenses, income before taxes and operating profit account for 13% and net income accounts for nearly 4%. In 2009 al whizz, Walgreens gross profit and operating expenses nearly cancel each other out. in that respect 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 performa nce has been diminishing over the last three years, and CVS/Pharmacys performance has risen.The reason behind the growing strength of CVS/Pharmacy has been the general, consistent financial growth. This will be illustrated by the financial ratios. Liquidity is the firms ability to meet its current obligations(Marshall, McManus, Vielle, 2010). Working capital is the supernumerary of a firms current assets over its current liabilities(2010).In this case, Walgreens has higher working capital than CVS/Pharmacy. On other tests 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 lowest net income in three years, they have a high comparable liquidity. Moreover, the higher net income for CVS/Pharmacy has not translated into higher liquidity. However, the increased in income has translated into a higher inventory turnover for C VS/Pharmacy. ConclusionThe findings of this paper are illustrating the transition in the marketplace between CVS/Pharmacy and Walgreens. For the last 20 years, these retail pharmacy firms have battled for supremacy 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 freeze off 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 change magnitude strength has been represented by their purchases of Longs Pharmacy and Caremark. It is my conclusion that this trend will continue