Walgreens Boots Alliance Inc. (NASDAQ:WBA)

Customer Relationships and Loyalty Card Holders

Values show a significant increase from 1,079 million in 2014 to 4,290 million in 2019. There was a peak in 2015 at 3,024 million followed by a decline until 2017, after which the figure sharply rose to the highest point in 2018 and maintained a similar level in 2019.

Favorable Lease Interests and Non-compete Agreements

This category has relatively stable values, ranging from 523 million to 680 million between 2014 and 2019, with slight fluctuations. The highest value occurred in 2018, followed by a modest decrease in 2019.

Trade Names and Trademarks (Amortizable)

There was a sharp increase from 191 million in 2014 to 675 million in 2015, then a gradual decline over the subsequent years, reaching 461 million in 2019.

Purchasing and Payer Contracts

Values fluctuated significantly, starting at 301 million in 2014, dropping to 94 million in 2015 and 2016, and then rising again to nearly 390 million in 2017-2019, indicating some volatility in this asset category.

Other Amortizable Intangible Assets

This item was reported only in 2014 at a negligible amount (4 million) with no subsequent data available.

Gross Amortizable Intangible Assets

A marked increase was observed from 2,108 million in 2014 to 5,787 million in 2019, with a peak of 5,794 million in 2018. There was a drop in 2016 and 2017, but the trend resumed upward thereafter.

Accumulated Amortization

Accumulated amortization increased consistently in magnitude over the years, from -936 million in 2014 to -2,021 million in 2019, showing systematic amortization of intangible assets.

Amortizable Intangible Assets, Net

Net amortizable intangible assets grew from 1,172 million in 2014 to 3,766 million in 2019, with a peak in 2018 at 4,154 million. There were fluctuations but an overall increasing trend indicating asset additions exceeding amortization.

Trade Names and Trademarks (Indefinite-lived)

Values were strong and relatively stable, starting at 6,590 million in 2015 and slightly declining to 5,232 million in 2019, reflecting a large and enduring value in this category.

Pharmacy Licenses

Reported from 2015, pharmacy licenses declined steadily from 2,464 million in 2015 to 1,878 million in 2019, suggesting a reduction or impairment in these assets over time.

Indefinite-lived Intangible Assets

The indefinite-lived intangible assets decreased from 9,054 million in 2015 to 7,110 million in 2019, indicating a downward trend possibly due to revaluation or impairment.

Intangible Assets, Net

This aggregate number showed fluctuations: a rise from 1,180 million in 2014 to 12,351 million in 2015, followed by a decline in 2016 and 2017, then a peak in 2018 at 11,783 million, and a dip to 10,876 million in 2019. The data reflects volatility but an overall increase compared to 2014.

Goodwill

Goodwill surged from 2,359 million in 2014 to a peak of 16,914 million in 2018, then slightly decreased to 16,560 million in 2019. This indicates accumulation of goodwill assets likely due to acquisitions.

Goodwill and Other Intangible Assets

This comprehensive category rose significantly from 3,539 million in 2014 to a high of 28,697 million in 2018 before decreasing to 27,436 million in 2019. The pattern aligns with increases in goodwill and intangible assets, showing substantial asset growth over the period.

The analysis of the financial data over the six-year period reveals distinct trends in the reported and goodwill-adjusted figures for total assets and shareholders’ equity.

Total Assets

Reported total assets exhibit a substantial increase from 37,182 million US dollars in 2014 to a peak of 72,688 million in 2016, followed by a decline and stabilization around 67,000 million in the subsequent years. The adjusted total assets, which presumably exclude goodwill and intangible assets, show a more moderate increase from 34,823 million in 2014 to 57,161 million in 2016, and then decrease, stabilizing near 51,000 million from 2017 onwards.

Shareholders’ Equity

The reported shareholders’ equity rises significantly from 20,457 million in 2014 to 30,861 million in 2015 but then gradually declines each year, reaching 23,512 million by 2019. Conversely, the adjusted shareholders’ equity decreases consistently over the entire period from 18,098 million in 2014 to 6,952 million in 2019, representing a marked erosion in equity after adjusting for goodwill.

Comparative Insights

The divergence between reported and adjusted figures indicates that goodwill or intangible assets constitute a significant portion of total assets and equity, particularly evident post-2014. The substantial increase in reported assets and equity in 2015 may correlate with acquisition activity or revaluation involving goodwill that is excluded in adjusted figures. The consistent decline in adjusted shareholders' equity points to either asset impairments, operational losses, or other factors reducing net asset value when intangible assets are disregarded.

Conclusion

Overall, the data suggests that while reported figures show a peak and some volatility in assets and equity, the adjusted metrics reveal a steady diminishment of tangible asset base and equity. The trend underlines the importance of considering goodwill adjustments for a clearer picture of the company’s underlying financial health across the evaluated period.

The analysis of the financial ratios over the period from 2014 to 2019 reveals several notable trends regarding the company's efficiency, leverage, and profitability.

Total Asset Turnover

The reported total asset turnover ratio initially declined from 2.05 in 2014 to 1.5 in 2015, followed by a gradual recovery and improvement in subsequent years, reaching 2.02 by 2019. In contrast, the adjusted total asset turnover demonstrates a steadier and more pronounced upward trend, increasing consistently from 2.19 in 2014 to 2.68 in 2019. This suggests an improvement in the company's utilization of assets to generate revenue when goodwill adjustments are considered, indicating enhanced operational efficiency over time.

Financial Leverage

The reported financial leverage ratio showed a consistent increase from 1.82 in 2014 to 2.88 in 2019, indicating a growing use of debt relative to equity. The adjusted financial leverage ratio displayed an even sharper rise, climbing from 1.92 in 2014 to 7.34 in 2019. This significant increase in adjusted leverage suggests that when excluding goodwill effects, the company has increasingly relied on financial leverage, potentially raising concerns about risk exposure.

Return on Equity (ROE)

The reported ROE presented a rising trajectory from 9.44% in 2014 to a peak of 19.32% in 2018, followed by a decrease to 16.94% in 2019. Meanwhile, the adjusted ROE showed a dramatic increase starting at 10.68% in 2014, surging to 57.28% by 2019. This stark contrast implies that adjustments for goodwill substantially enhance the perceived profitability relative to shareholders' equity, highlighting the impact of intangible assets on reported equity performance.

Return on Assets (ROA)

The reported ROA increased moderately from 5.2% in 2014 to 7.37% in 2018 before declining to 5.89% in 2019. Adjusted ROA mirrored a similar pattern but at higher levels, rising from 5.55% to 9.81% between 2014 and 2018, then falling to 7.8% in 2019. These trends indicate an overall improvement in asset profitability, although the dip in 2019 in both reported and adjusted figures suggests potential challenges in asset utilization or profitability in the most recent period analyzed.

In summary, the company's efficiency in asset use and profitability ratios generally improved over the examined period, particularly when adjusted for goodwill. However, the significant rise in adjusted financial leverage points to increased reliance on debt financing, which may imply heightened financial risk. The decline in profitability ratios in 2019 warrants further scrutiny to assess underlying causes and future outlook.

The analysis of the reported and goodwill-adjusted financial data reveals several key trends in the company's asset management and turnover performance over the six-year period ending in 2019.

Total Assets

Reported total assets showed a significant increase from 37,182 million US dollars in 2014 to a peak of 72,688 million in 2016. This was followed by a decline to 67,598 million by 2019. This fluctuation suggests a period of expansion followed by some asset reduction or revaluation in the subsequent years.

In contrast, adjusted total assets, which exclude goodwill, also increased significantly from 34,823 million in 2014 to 57,161 million in 2016, before declining to 51,038 million in 2019. The lower peak and final value compared to reported assets indicate that goodwill constitutes a considerable portion of total assets, affecting reported figures.

Total Asset Turnover Ratios

Reported total asset turnover decreased from 2.05 in 2014 to 1.5 in 2015, showing a reduction in revenue generated per unit of asset, then gradually increased year over year to reach 2.02 by 2019. This trend implies an initial decline in operational efficiency followed by continuous improvement toward 2014 levels.

The adjusted total asset turnover also declined from 2.19 in 2014 to 1.97 in 2015 but showed a stronger rebound and consistent improvement, rising to 2.68 by 2019. This indicates better utilization of assets excluding goodwill, with growing efficiency in generating sales from tangible and other adjusted asset bases.

Comparative Observations

The adjusted asset turnover ratios are consistently higher than the reported ratios throughout the period. This suggests that goodwill inflates asset figures and when excluded, the company demonstrates higher operational efficiency.

Overall, while total assets experienced volatility, asset turnover metrics show progressive improvement from the mid-point of the period onwards. This reflects enhanced asset management practices and increased revenue-generating effectiveness excluding goodwill effects.

The data presents a comprehensive overview of the company's financial position over a six-year period, highlighting both reported and goodwill-adjusted figures. A detailed analysis reveals distinct trends and variations in assets, equity, and financial leverage.

Total Assets

The reported total assets experienced a significant increase from 37,182 million US dollars in 2014 to a peak of 72,688 million in 2016, more than doubling in this period. However, subsequent years showed a decline, settling around 67,598 million by 2019. Adjusted total assets, which exclude goodwill, followed a similar upward trend initially but with lower absolute values, increasing from 34,823 million in 2014 to 57,161 million in 2016, then declining gradually to 51,038 million in 2019. This suggests that goodwill constituted a substantial portion of assets in the middle years, which saw some impairment or write-downs in the later years.

Shareholders’ Equity

The reported shareholders’ equity rose markedly from 20,457 million in 2014 to a high of 30,861 million in 2015 but then steadily declined to 23,512 million by 2019. The adjusted shareholders’ equity, reflecting a deduction of goodwill impact, exhibited a continuous downward trend from 18,098 million in 2014 to 6,952 million in 2019. This continuous decline in adjusted equity indicates a reduction in the net asset base excluding goodwill, pointing toward erosion in underlying equity value over time.

Financial Leverage

Reported financial leverage, calculated as the ratio of total assets to shareholders' equity, increased from 1.82 in 2014 to 2.88 by 2019. This rising leverage implies growing reliance on debt or other liabilities relative to equity. The adjusted financial leverage presents an even more pronounced increase, starting at 1.92 in 2014 and reaching 7.34 in 2019. This sharp rise in adjusted leverage reflects the combined effect of declining adjusted equity and relatively stable or declining adjusted assets, suggesting heightened financial risk when goodwill adjustments are taken into account.

In summary, the company's assets expanded significantly until 2016 but reversed thereafter, with goodwill adjustments highlighting a substantial portion of those assets. Equity values have declined consistently since their peak, more markedly when adjusted for goodwill, indicating diminished net asset value. The increasing financial leverage ratios, particularly on an adjusted basis, suggest growing financial risk and increased dependency on external financing over the reported period.

The financial data reveals distinct trends in both the reported and goodwill-adjusted figures over the six-year period ending August 31, 2019. The analysis of shareholders’ equity and return on equity (ROE) provides insights into the company’s equity base and profitability performance.

Total Shareholders’ Equity

The reported total shareholders’ equity shows a general decline from US$20,457 million in 2014 to US$23,512 million in 2019, with a peak observed in 2015 at US$30,861 million. After 2015, the equity consistently decreased, reaching its lowest value in 2019.

In contrast, the adjusted total shareholders’ equity, which accounts for goodwill, exhibits a steady and notable decline throughout the entire period. Beginning at US$18,098 million in 2014, it falls continuously to US$6,952 million in 2019. The adjusted equity decreases more sharply than the reported figures, reflecting a reduction in net tangible equity over time.

Return on Equity (ROE)

The reported ROE indicates an overall upward trajectory with some fluctuations. It started at 9.44% in 2014, increased to a peak of 19.32% in 2018, and then slightly declined to 16.94% in 2019. This pattern suggests improved profitability relative to reported shareholders’ equity, with a slight retreat in the final year.

The adjusted ROE, however, displays a significantly different and more pronounced upward trend. From 10.68% in 2014, the adjusted ROE rises dramatically, reaching above 55% by 2018 and further increasing to 57.28% in 2019. This sharp increase suggests that, when excluding goodwill, the company’s returns on tangible equity intensified substantially over the period.

Summary of Trends

The declining adjusted shareholders’ equity combined with the sharply increasing adjusted ROE indicates that the company’s profitability on a tangible equity basis is improving despite a shrinking equity base. Conversely, the reported equity’s less steep decline and the more modest increase in reported ROE suggest that goodwill and intangible assets may be masking some underlying changes in tangible capital structure.

Overall, the data implies enhanced operational efficiency or profitability improvements in recent years, particularly evident in the adjusted performance metrics. The disparity between reported and adjusted figures highlights the significance of goodwill adjustments in understanding the company’s true equity position and return dynamics.

The analysis of the financial data over the period from 2014 to 2019 reveals several noteworthy trends in both asset values and return on assets (ROA) metrics.

Total Assets (Reported vs. Adjusted)

The reported total assets showed a significant increase from 37,182 million USD in 2014 to a peak of 72,688 million USD in 2016, followed by a decline to 67,598 million USD in 2019. This suggests a period of rapid asset growth culminating in 2016, then a partial contraction or stabilization thereafter.

Adjusted total assets, which exclude goodwill, also increased from 34,823 million USD in 2014 to 57,161 million USD in 2016, but thereafter experienced a more pronounced decrease than the reported assets, falling to 51,038 million USD in 2019. This indicates that non-goodwill assets decreased steadily after 2016.

Return on Assets (ROA) - Reported

The reported ROA showed moderate fluctuations, beginning at 5.2% in 2014 and increasing to 7.37% in 2018, representing a general upward trend in profitability relative to reported assets. However, in 2019, the reported ROA declined to 5.89%, suggesting a decrease in efficiency or profitability in that final year.

Return on Assets (ROA) - Adjusted

Adjusted ROA, which is calculated excluding goodwill, consistently exceeded the reported ROA over the entire period and exhibited a more pronounced upward trend. Starting at 5.55% in 2014, adjusted ROA rose to a high of 9.81% in 2018 before declining to 7.8% in 2019. This pattern indicates improved profitability relative to tangible asset base up to 2018, followed by a decrease in 2019.

Comparative Insights

The difference between reported and adjusted total assets has widened significantly, particularly evident in 2015 and 2016. This expansion points towards increasing goodwill or intangible assets during that period, which then stabilized or slightly decreased afterward.

Similarly, the adjusted ROA being higher than the reported ROA throughout suggests that when goodwill is excluded, asset productivity or returns are stronger. The peak in adjusted ROA in 2018 points to optimal asset utilization excluding goodwill in that year.

The consistent decline in both reported and adjusted total assets after 2016, coupled with a drop in ROA values in 2019, may indicate strategic asset restructuring, divestitures, or weakening profitability conditions.