ASIAN 1191 Lecture 1: Horror, Supernatural, Monsters
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Partial Classified Balance Sheet for Walgreens
The following items, listed alphabetically, appear on WalgreensBoots Alliance, Inc consolidated balance sheet at August 31, 2015(in millions):
Accrued expenses and other liabilities | $5,225 |
Deferred income taxes (long-term) | 3,538 |
Long-term debt | 13,315 |
Other non-current liabilities | 4,072 |
Short-term borrowings | 1,068 |
Trade accounts payable | 10,088 |
Income taxes | 176 |
Source: Walgreens, 2015 Form 10-K.
Required:
1. Prepare the Current Liabilities andLong-Term Liabilities sections of Walgreens's classified balancesheet at August 31, 2015. Enter your answers in millions.
Walgreens | |
Balance Sheet (Partial) | |
August 31, 2015 | |
Current Liabilities | |
$ | |
Total current liabilities | $ |
Long-Term Liabilities | |
$ | |
Total long-term liabilities | $ |
2. Walgreens had total liabilities of $16,633and total shareholdersâ equity of $20,561 at August 31, 2014. Totalshareholdersâ equity at August 31, 2015, amounted to $31,300. (Allamounts are in millions.) Compute Walgreensâ debt-to-equity ratioat August 31, 2015 and 2014. Round your answers to two decimalplaces.
Computation of debt-to-equity ratios: | |
2014: | |
2015: |
As an investor, how would you react to the changes in thedebt-to-equity ratio?
If the ratio is constant and less than 1, it indicates thecompany is safe to invest or remain invested.
If the ratio has increased over 2 periods and is more than 1, itindicates the company is safe to invest and remain invested.
If the ratio has decreased over 2 periods and is less than one,it indicates the company is not a safe investment and you wouldlook for better options to invest.
This ratio is not at all significant from the investor's pointof view, you would ignore this ratio.
3. What other related ratios would thecompanyâs lenders use to assess the company? What do these ratiosmeasure?
The lenders would be interested in Walgreensâ and . Both ratiosmeasure the degree to which a company can make its out of currentcash flows.