Debt to equity ratio and interest coverage ratio

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Using data from the CVS Corporation annual report in the Supplement to Chapter 5, conduct a comprehensive ratio analysis that compares the company's performance in 2008 and 2007. If you have computed ratios for CVS in previous chapters, you may prepare a table that summarizes the ratios and show calculations only for the ratios not previously calculated. If this is the first ratio analysis you have done for CVS, show all your computations. In either case, after each group of ratios, comment on the performance of CVS. Round your calculations to one decimal place. Prepare and comment on the following categories of ratios:

Liquidity analysis: current ratio, quick ratio, receivable turnover, days' sales uncollected, inventory turnover, days' inventory on hand, payables turnover, and days' payable. (Accounts Receivable, Inventories, and Accounts Payable were [in millions] $2,381.7, $7,108.9, and $2,521.5, respectively, in 2006.)

Profitability analysis: profit margin, asset turnover, return on assets, and return on equity. (Total assets and total shareholders' equity were [in millions] $20,574.1 and $9,917.6, respectively, in 2006.)

Long-term solvency analysis: debt to equity ratio and interest coverage ratio.

Cash flow adequacy analysis: cash flow yield, cash flows to sales, cash flows to assets, and free cash flow.

Market strength analysis: price/earnings (P/E) ratio and dividends yield.

Reference no: EM13340600

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