Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Walgreens Boots Alliance Inc., income tax expense (benefit), continuing operations

US$ in millions

12 months ended:	Aug 31, 2019	Aug 31, 2018	Aug 31, 2017	Aug 31, 2016	Aug 31, 2015	Aug 31, 2014
Federal	201)	866)	759)	999)	846)	1,207)
State	46)	103)	45)	56)	121)	109)
Non–U.S.	241)	353)	390)	371)	128)	35)
Current provision	488)	1,322)	1,194)	1,426)	1,095)	1,351)
Federal, tax law change	—)	(648)	—)	—)	—)	—)
Federal, excluding tax law change	151)	304)	(306)	(183)	(23)	183)
State	4)	78)	(24)	6)	(16)	(3)
Non–U.S., tax law change	—)	—)	(80)	(182)	—)	—)
Non–U.S., excluding tax law change	(55)	(58)	(24)	(70)	—)	(5)
Deferred provision	100)	(324)	(434)	(429)	(39)	175)
Income tax provision	588)	998)	760)	997)	1,056)	1,526)

Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).

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Item	Description	The company
Current provision	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Walgreens Boots Alliance Inc. current provision increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.
Deferred provision	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Walgreens Boots Alliance Inc. deferred provision increased from 2017 to 2018 and from 2018 to 2019.
Income tax provision	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Walgreens Boots Alliance Inc. income tax provision increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Walgreens Boots Alliance Inc., effective income tax rate (EITR) reconciliation

	Aug 31, 2019	Aug 31, 2018	Aug 31, 2017	Aug 31, 2016	Aug 31, 2015	Aug 31, 2014
Federal statutory tax rate	21.00%	25.70%	35.00%	35.00%	35.00%	35.00%
State income taxes, net of federal benefit	0.90%	2.30%	0.30%	0.80%	1.30%	1.90%
Loss on Alliance Boots call option	0.00%	0.00%	0.00%	0.00%	0.00%	8.50%
Deferred tax asset recognition	0.00%	0.00%	0.00%	0.00%	-4.10%	0.00%
Gain on previously held equity interest	0.00%	0.00%	0.00%	0.00%	-5.80%	0.00%
Foreign income taxed at non-U.S. rates	-2.10%	-12.20%	-11.80%	-7.80%	-6.20%	-3.10%
Non-taxable income	-3.50%	-5.20%	-5.30%	-4.40%	-2.60%	0.00%
Non-deductible expenses	0.50%	2.10%	1.50%	1.10%	2.30%	0.30%
Transition tax	0.00%	12.40%	0.00%	0.00%	0.00%	0.00%
Tax law changes	-0.40%	-10.90%	-1.60%	-3.50%	0.00%	0.00%
Change in valuation allowance	1.90%	8.70%	0.70%	1.70%	0.00%	0.00%
Tax credits	-4.80%	-6.90%	-2.90%	-1.50%	0.00%	0.00%
Other	-0.50%	0.70%	-0.20%	-2.00%	0.00%	0.30%
Effective income tax rate	13.00%	16.70%	15.70%	19.40%	19.90%	42.90%

Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).

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Item	Description	The company
Effective income tax rate	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Walgreens Boots Alliance Inc. effective income tax rate increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Walgreens Boots Alliance Inc., components of deferred tax assets and liabilities

US$ in millions

	Aug 31, 2019	Aug 31, 2018	Aug 31, 2017	Aug 31, 2016	Aug 31, 2015	Aug 31, 2014
Postretirement benefits	—)	—)	134)	190)	130)	247)
Compensation and benefits	133)	152)	207)	205)	224)	166)
Insurance	90)	74)	109)	75)	68)	98)
Accrued rent	219)	271)	174)	169)	167)	166)
Outside basis difference	—)	—)	55)	134)	73)	—)
Allowance for doubtful accounts	13)	27)	55)	65)	67)	65)
Tax attributes	6,687)	2,351)	555)	373)	341)	430)
Stock compensation	45)	44)	73)	97)	119)	131)
Deferred income	115)	110)	220)	150)	—)	—)
Other	78)	44)	88)	195)	93)	75)
Deferred tax assets, gross	7,380)	3,073)	1,670)	1,653)	1,282)	1,378)
Valuation allowance	(6,638)	(2,226)	(408)	(305)	(125)	(223)
Deferred tax assets	742)	847)	1,262)	1,348)	1,157)	1,155)
Accelerated depreciation	(475)	(603)	(841)	(1,205)	(1,234)	(1,244)
Inventory	(394)	(301)	(416)	(388)	(420)	(407)
Intangible assets	(1,116)	(1,234)	(1,277)	(1,418)	(1,822)	(64)
Equity method investment	(481)	(459)	(1,002)	(978)	(333)	(355)
Deferred income	—)	—)	—)	—)	(889)	(208)
Deferred tax liabilities	(2,466)	(2,597)	(3,536)	(3,989)	(4,698)	(2,278)
Net deferred tax assets (liabilities)	(1,724)	(1,750)	(2,274)	(2,641)	(3,541)	(1,123)

Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).

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Item	Description	The company
Deferred tax assets, gross	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Walgreens Boots Alliance Inc. deferred tax assets, gross increased from 2017 to 2018 and from 2018 to 2019.
Deferred tax assets	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Walgreens Boots Alliance Inc. deferred tax assets decreased from 2017 to 2018 and from 2018 to 2019.
Net deferred tax assets (liabilities)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Walgreens Boots Alliance Inc. net deferred tax assets (liabilities) increased from 2017 to 2018 and from 2018 to 2019.

Walgreens Boots Alliance Inc., adjustments to financial statements

US$ in millions

	Aug 31, 2019	Aug 31, 2018	Aug 31, 2017	Aug 31, 2016	Aug 31, 2015	Aug 31, 2014
Adjustment to Total Liabilities
Total liabilities (as reported)	43,447)	41,435)	37,735)	42,407)	37,482)	16,621)
Less: Noncurrent deferred tax liabilities, net	1,785)	1,815)	2,281)	2,644)	3,538)	1,048)
Total liabilities (adjusted)	41,662)	39,620)	35,454)	39,763)	33,944)	15,573)
Adjustment to Total Walgreens Boots Alliance, Inc. Shareholders’ Equity
Total Walgreens Boots Alliance, Inc. shareholders’ equity (as reported)	23,512)	26,007)	27,466)	29,880)	30,861)	20,457)
Less: Net deferred tax assets (liabilities)	(1,724)	(1,750)	(2,274)	(2,641)	(3,541)	(1,123)
Total Walgreens Boots Alliance, Inc. shareholders’ equity (adjusted)	25,236)	27,757)	29,740)	32,521)	34,402)	21,580)
Adjustment to Net Earnings Attributable To Walgreens Boots Alliance, Inc.
Net earnings attributable to Walgreens Boots Alliance, Inc. (as reported)	3,982)	5,024)	4,078)	4,173)	4,220)	1,932)
Add: Deferred income tax expense (benefit)	100)	(324)	(434)	(429)	(39)	175)
Net earnings attributable to Walgreens Boots Alliance, Inc. (adjusted)	4,082)	4,700)	3,644)	3,744)	4,181)	2,107)

Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).

Walgreens Boots Alliance Inc., Financial Data: Reported vs. Adjusted

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Walgreens Boots Alliance Inc., adjusted financial ratios

	Aug 31, 2019	Aug 31, 2018	Aug 31, 2017	Aug 31, 2016	Aug 31, 2015	Aug 31, 2014
Net Profit Margin
Reported net profit margin	2.91%	3.82%	3.45%	3.56%	4.08%	2.53%
Adjusted net profit margin	2.98%	3.57%	3.08%	3.19%	4.04%	2.76%
Financial Leverage
Reported financial leverage	2.88	2.62	2.40	2.43	2.23	1.82
Adjusted financial leverage	2.68	2.45	2.22	2.24	2.00	1.72
Return on Equity (ROE)
Reported ROE	16.94%	19.32%	14.85%	13.97%	13.67%	9.44%
Adjusted ROE	16.18%	16.93%	12.25%	11.51%	12.15%	9.76%
Return on Assets (ROA)
Reported ROA	5.89%	7.37%	6.18%	5.74%	6.14%	5.20%
Adjusted ROA	6.04%	6.90%	5.52%	5.15%	6.08%	5.67%

Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Walgreens Boots Alliance Inc. adjusted net profit margin ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Walgreens Boots Alliance Inc. adjusted financial leverage ratio increased from 2017 to 2018 and from 2018 to 2019.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Walgreens Boots Alliance Inc. adjusted ROE improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Walgreens Boots Alliance Inc. adjusted ROA improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.

Walgreens Boots Alliance Inc., Financial Ratios: Reported vs. Adjusted

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	Aug 31, 2019	Aug 31, 2018	Aug 31, 2017	Aug 31, 2016	Aug 31, 2015	Aug 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to Walgreens Boots Alliance, Inc.	3,982)	5,024)	4,078)	4,173)	4,220)	1,932)
Sales	136,866)	131,537)	118,214)	117,351)	103,444)	76,392)
Profitability Ratio
Net profit margin¹	2.91%	3.82%	3.45%	3.56%	4.08%	2.53%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc.	4,082)	4,700)	3,644)	3,744)	4,181)	2,107)
Sales	136,866)	131,537)	118,214)	117,351)	103,444)	76,392)
Profitability Ratio
Adjusted net profit margin²	2.98%	3.57%	3.08%	3.19%	4.04%	2.76%

Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).

2019 Calculations

¹ Net profit margin = 100 × Net earnings attributable to Walgreens Boots Alliance, Inc. ÷ Sales
= 100 × 3,982 ÷ 136,866 = 2.91%

² Adjusted net profit margin = 100 × Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. ÷ Sales
= 100 × 4,082 ÷ 136,866 = 2.98%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Walgreens Boots Alliance Inc. adjusted net profit margin ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

	Aug 31, 2019	Aug 31, 2018	Aug 31, 2017	Aug 31, 2016	Aug 31, 2015	Aug 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Total assets	67,598)	68,124)	66,009)	72,688)	68,782)	37,182)
Total Walgreens Boots Alliance, Inc. shareholders’ equity	23,512)	26,007)	27,466)	29,880)	30,861)	20,457)
Solvency Ratio
Financial leverage¹	2.88	2.62	2.40	2.43	2.23	1.82
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Total assets	67,598)	68,124)	66,009)	72,688)	68,782)	37,182)
Adjusted total Walgreens Boots Alliance, Inc. shareholders’ equity	25,236)	27,757)	29,740)	32,521)	34,402)	21,580)
Solvency Ratio
Adjusted financial leverage²	2.68	2.45	2.22	2.24	2.00	1.72

Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).

2019 Calculations

¹ Financial leverage = Total assets ÷ Total Walgreens Boots Alliance, Inc. shareholders’ equity
= 67,598 ÷ 23,512 = 2.88

² Adjusted financial leverage = Total assets ÷ Adjusted total Walgreens Boots Alliance, Inc. shareholders’ equity
= 67,598 ÷ 25,236 = 2.68

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Walgreens Boots Alliance Inc. adjusted financial leverage ratio increased from 2017 to 2018 and from 2018 to 2019.

	Aug 31, 2019	Aug 31, 2018	Aug 31, 2017	Aug 31, 2016	Aug 31, 2015	Aug 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to Walgreens Boots Alliance, Inc.	3,982)	5,024)	4,078)	4,173)	4,220)	1,932)
Total Walgreens Boots Alliance, Inc. shareholders’ equity	23,512)	26,007)	27,466)	29,880)	30,861)	20,457)
Profitability Ratio
ROE¹	16.94%	19.32%	14.85%	13.97%	13.67%	9.44%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc.	4,082)	4,700)	3,644)	3,744)	4,181)	2,107)
Adjusted total Walgreens Boots Alliance, Inc. shareholders’ equity	25,236)	27,757)	29,740)	32,521)	34,402)	21,580)
Profitability Ratio
Adjusted ROE²	16.18%	16.93%	12.25%	11.51%	12.15%	9.76%

Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).

2019 Calculations

¹ ROE = 100 × Net earnings attributable to Walgreens Boots Alliance, Inc. ÷ Total Walgreens Boots Alliance, Inc. shareholders’ equity
= 100 × 3,982 ÷ 23,512 = 16.94%

² Adjusted ROE = 100 × Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. ÷ Adjusted total Walgreens Boots Alliance, Inc. shareholders’ equity
= 100 × 4,082 ÷ 25,236 = 16.18%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Walgreens Boots Alliance Inc. adjusted ROE improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.

	Aug 31, 2019	Aug 31, 2018	Aug 31, 2017	Aug 31, 2016	Aug 31, 2015	Aug 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to Walgreens Boots Alliance, Inc.	3,982)	5,024)	4,078)	4,173)	4,220)	1,932)
Total assets	67,598)	68,124)	66,009)	72,688)	68,782)	37,182)
Profitability Ratio
ROA¹	5.89%	7.37%	6.18%	5.74%	6.14%	5.20%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc.	4,082)	4,700)	3,644)	3,744)	4,181)	2,107)
Total assets	67,598)	68,124)	66,009)	72,688)	68,782)	37,182)
Profitability Ratio
Adjusted ROA²	6.04%	6.90%	5.52%	5.15%	6.08%	5.67%

Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).

2019 Calculations

¹ ROA = 100 × Net earnings attributable to Walgreens Boots Alliance, Inc. ÷ Total assets
= 100 × 3,982 ÷ 67,598 = 5.89%

² Adjusted ROA = 100 × Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. ÷ Total assets
= 100 × 4,082 ÷ 67,598 = 6.04%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Walgreens Boots Alliance Inc. adjusted ROA improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.

Walgreens Boots Alliance Inc. (NASDAQ:WBA)

Analysis of Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Adjustments to Financial Statements: Removal of Deferred Taxes

Walgreens Boots Alliance Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Walgreens Boots Alliance Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)