Which company is more efficient in its operating expenses

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Comparison Analysis: Income statement Analysis

Refer to the CVs annual report in the Supplement and to the following data (in millions) for Walgreens in 2011: net sales, $72,184; cost of sales, $51,692; total operating expenses, $16,561; and inventories, $8,044. Determine which com- pany-CVS or Walgreens-had more profitable merchandising operations in 2011 by preparing a schedule that compares the companies based on net sales, cost of sales, gross margin, total operating expenses, and income from operations as a percentage of sales. (Hint: You should put the income statements in comparable formats.) In addition, for each company, compute inventories as a percentage of the cost of sales. Which company has the highest prices in relation to costs of sales? Which company is more efficient in its operating expenses? Which company manages its inventories better? Overall, on the basis of the income statement, which company is more profitable? Explain your answers.

Reference no: EM13884733

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