Cvs Annual Report Essay

Executive Summary/Company History/Products and ServicesCVS/ pharmaceutics has shown a tenacious growth for the finishing three geezerhood. Three years past CVS/Pharmacy has merged with Longs Pharmacy and C bemark to form the largest sell chemists drawstring in the United States. CVS/Pharmacy- CVS/Pharmacy began operations in 1963, and added the apothecarys shop part in 1967. In 2007, CVS merged with Caremark Rx, Inc.Finally, in 2008, CVS bought the Longs Drug Store chain. CVS has everyplace 7000 stores(Cvs.com, 2010). At the close of 9 months of 2010, the friendship has lost 9.25% against 2009 bread income. However, the company has increase their assets and liabilities by .1% against 2009 figures(Cvs.com, 2010). As the company stands now in impulsions, win 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(prenominal) years period.Poor proceeding by the companys Pharmacy Services segmentits reve nues dropped 8.5%, to $11.9 billionwas a major ratifier to the companys woes. CVS Retail Pharmacy segment revenues actually increase 4.1%, with total same-store sales climbing 2.5%(Trendwatch, 2010). CVS/Pharmacy is in the process of transitioning their lead at CEO.Tom Ryan allow 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. this instant that Toms tenure is coming to a close, a pertly dawn isoccurring for the corporation with Larry Merlo taking the helm. Competitor AnalysisIn the retail pharmacy industry, there are only three pure pharmacy incorruptibles CVS/Pharmacy, Walgreens, and Rite-Aid. Pure pharmacy firms are pharmacy retailers whose business is built roughly the pharmacy. Wal-Mart, Kroger, and local grocery stores fill pharmacies as an extension of their business plan, save it is not the focus of their company. CVS/Pharmacy and Walgreens have been battling over the top mail service for years, and Rite-Aid has been ranked at a steady third in the grocery 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 sales against run short year by 6.4%, and sort out earnings by 4.2%(Walgreens.com, 2010). Moreover, they have posted 36 corking 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 share at 31.2% compared to CVS/Pharmacys 25%(Wikinvest.com, 2010). The last 10 years has been the first decade that a Walgreens family member was not at t he helm of the Walgreens Pharmacy chain. Charles Walgreens anesthetised from the CEO position in 1998, entirely 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 Chief Executive Officer. Mr. Wasson has worked with Walgreens for 31 years. In death, Walgreens & CVS/Pharmacy are the giants in retail pharmacy. Their strengths, weaknesses, successes, and failures have brought them to a realistic dead heat. The purpose of this research is analyze the pecuniary strength of both to determine which is in the best fiscal health. Common Size StatementsWe will first compare CVS/Pharmacy and Walgreens through common size financial statements. Commons size financial statements allow for comparisons to be made among companies of different sizes and volumes in order to see the true performance. CVS/Pharmacy has over 7000 stores, and Walgreens Pharmacy only has 6000 stores.The differen ce in size will have animpact on expense, revenue, and income. Every company plans to get the most tabu of every dollar spent. Consequently, we will be comparing the their financial performance from 2007-2009.From the beginning, Walgreens has yielded a better megascopic get ahead by an average of 8% over CVS/Pharmacy. Gross net profit is the amount left over after(prenominal) 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 more.However, Walgreens celebration is short lived because the correspondence statement is more than gross profit. In fact the 8% saltation in gross profit they gave back in operating(a) expenses. Walgreens operating expenses took, on average, 22.5% apart 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, magic spell Walgreens net income has steady decreased three years in a row. As a company, CVS/Pharmacy received a 20% gross profit margin.The contiguous 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 unmatched, Walgreens gross profit and operating expenses nearly cancel each other out. in that location 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 st atements, Walgreens performance 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 prodigality 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 inv entory turnover for CVS/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 light 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