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Analysis Of Financial Statements

2370 words - 9 pages

Analysis of Financial PAGE \* MERGEFORMAT 1
Running head: ANALYSIS OF FINANCIAL STATEMENTSAnalysis of Financial StatementsYolanda Cannon, Tiffany Nicole Jackson & Karmisha WomackUniversity of PhoenixFinancial Analysis for Managers IFIN/324Robert Fencl10 May 2007Analysis of Financial StatementsFinancial statements or reports are records of a company's financial transactions. They determine the profitability of a company's finances in the short-term and long-term. There are four basic financial statements, the Balance Sheet, the Income Statement, the Cash Flows Statement, and the Statement of Retained Earnings (Wikipedia, The Free Encyclopedia [WTFE], 2007).Our textbook, Accounting: Concepts and Applications, gives the following definitions for the four primary financial statements:The Balance Sheet reports a company's assets, liabilities, and owners' equity at a particular date.The Income Statement reports the amount of net income earned by a company during a period.The Statement of Cash Flows reports the amount of cash collected and paid out by a company during a period of time.The Statement of Retained Earnings reports the change in retained earnings during a period of time.Our learning team has selected to review the financial statements of two of the leading companies in the retail pharmacy industry, Walgreen Co. and CVS Corporation. Walgreens and CVS are common household names. It is virtually impossible to go into any city and not pass by a Walgreens and/or CVS. These companies have stock that is publicly traded. Both companies must produce public financial statements at the end of every fiscal year for potential investors, shareholders, etc.Our team goal is to examine the financial statements for both companies and give a description of the financial information included in these statements. But before we go into detail on each company's vital information, we will give some background information about both Walgreens and CVS.Walgreens was founded in 1901 in Chicago, Illinois, by Charles Walgreen Sr. The company's stock went public in 1927. It is the largest drugstore chain in the United States based on sales (MarketLine Business Information Center [MLBIC], 2006. They sell general merchandise, such as health, beauty, and food products, but primarily prescription and non-prescription drugs. At the end of their fiscal year, August 2006, they recorded sales of $47.4 billion. As of March 31, 2007 they have 5,675 stores in operation in the US and Puerto Rico, with a goal of 7,000 by 2010(www.walgreens.com, 2007).Walgreens financial statements were in their annual report for the year 2006, located on their website. They had three statements, Consolidated Statements of Earnings and Shareholders' Equity (Income Statement and Retained Earnings combined), Consolidated Balance Sheets and Consolidated Statements of Cash Flows. Their 2006 financial statements were audited by a registered independent public accounting firm of Deloitte &...

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