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Microsoft Excel LibreOffice Calc

Walgreens Boots Alliance Inc. (WBA)


Analysis of Inventory

Advanced level


Accounting Policy on Inventory

Walgreens Boots Alliance values inventories on a lower of cost and net realizable value or market basis. Inventories include product costs, inbound freight, direct labor, warehousing costs for retail pharmacy operations, overhead costs relating to the manufacture and distribution of products and vendor allowances not classified as a reduction of advertising expense.

Walgreens Boots Alliance’s Retail Pharmacy USA segment inventory is accounted for using the last-in-first-out (“LIFO”) method. The total carrying value of the segment inventory accounted for under the LIFO method was $6.6 billion and $6.7 billion at August 31, 2019 and 2018, respectively. At August 31, 2019 and 2018, Retail Pharmacy USA segment inventory would have been greater by $3.2 billion and $3.0 billion, respectively, if they had been valued on a lower of first-in-first-out (“FIFO”) cost and net realizable value.

Walgreens Boots Alliance’s Retail Pharmacy International and Pharmaceutical Wholesale segments’ inventory is primarily accounted for using the FIFO method. The total carrying value of the inventory for Retail Pharmacy International and Pharmaceutical Wholesale segments was $2.7 billion and $2.8 billion at August 31, 2019 and 2018, respectively.

Source: 10-K (filing date: 2019-10-28).


Inventory Disclosure

Walgreens Boots Alliance Inc., balance sheet: inventory

US$ in millions

Microsoft Excel LibreOffice Calc
Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014
Inventories hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-10-28), 10-K (filing date: 2018-10-11), 10-K (filing date: 2017-10-25), 10-K (filing date: 2016-10-20), 10-K (filing date: 2015-10-28), 10-K (filing date: 2014-10-20).

Item Description The company
Inventories Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or operating cycle, if longer. Walgreens Boots Alliance Inc.’s inventories increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.

Adjustment to Inventory: Conversion from LIFO to FIFO

Adjusting LIFO Inventory to FIFO (Current) Cost

US$ in millions

Microsoft Excel LibreOffice Calc
Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014
Adjustment to Inventories
Inventories at LIFO (as reported) hidden hidden hidden hidden hidden hidden
Add: Inventory LIFO reserve hidden hidden hidden hidden hidden hidden
Inventories at FIFO (adjusted) hidden hidden hidden hidden hidden hidden
Adjustment to Current Assets
Current assets (as reported) hidden hidden hidden hidden hidden hidden
Add: Inventory LIFO reserve hidden hidden hidden hidden hidden hidden
Current assets (adjusted) hidden hidden hidden hidden hidden hidden
Adjustment to Total Assets
Total assets (as reported) hidden hidden hidden hidden hidden hidden
Add: Inventory LIFO reserve hidden hidden hidden hidden hidden hidden
Total assets (adjusted) hidden hidden hidden hidden hidden hidden
Adjustment to Total Walgreens Boots Alliance, Inc. Shareholders’ Equity
Total Walgreens Boots Alliance, Inc. shareholders’ equity (as reported) hidden hidden hidden hidden hidden hidden
Add: Inventory LIFO reserve hidden hidden hidden hidden hidden hidden
Total Walgreens Boots Alliance, Inc. shareholders’ equity (adjusted) hidden hidden hidden hidden hidden hidden
Adjustment to Net Earnings Attributable To Walgreens Boots Alliance, Inc.
Net earnings attributable to Walgreens Boots Alliance, Inc. (as reported) hidden hidden hidden hidden hidden hidden
Add: Increase (decrease) in inventory LIFO reserve hidden hidden hidden hidden hidden hidden
Net earnings attributable to Walgreens Boots Alliance, Inc. (adjusted) hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-10-28), 10-K (filing date: 2018-10-11), 10-K (filing date: 2017-10-25), 10-K (filing date: 2016-10-20), 10-K (filing date: 2015-10-28), 10-K (filing date: 2014-10-20).

Walgreens Boots Alliance Inc.’s inventory value on Aug 31, 2019 would be $12,533  (in millions) if the FIFO inventory method was used instead of LIFO. Walgreens Boots Alliance Inc.’s inventories, valued on a LIFO basis, on Aug 31, 2019 were $9,333 . Walgreens Boots Alliance Inc.’s inventories would have been $3,200  higher than reported on Aug 31, 2019 if the FIFO method had been used instead.


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


Adjusted Financial Ratios: LIFO vs. FIFO (Summary)

Walgreens Boots Alliance Inc., adjusted financial ratios

Microsoft Excel LibreOffice Calc
Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014
Current Ratio
Reported current ratio (LIFO) hidden hidden hidden hidden hidden hidden
Adjusted current ratio (FIFO) hidden hidden hidden hidden hidden hidden
Net Profit Margin
Reported net profit margin (LIFO) hidden hidden hidden hidden hidden hidden
Adjusted net profit margin (FIFO) hidden hidden hidden hidden hidden hidden
Total Asset Turnover
Reported total asset turnover (LIFO) hidden hidden hidden hidden hidden hidden
Adjusted total asset turnover (FIFO) hidden hidden hidden hidden hidden hidden
Financial Leverage
Reported financial leverage (LIFO) hidden hidden hidden hidden hidden hidden
Adjusted financial leverage (FIFO) hidden hidden hidden hidden hidden hidden
Return on Equity (ROE)
Reported ROE (LIFO) hidden hidden hidden hidden hidden hidden
Adjusted ROE (FIFO) hidden hidden hidden hidden hidden hidden
Return on Assets (ROA)
Reported ROA (LIFO) hidden hidden hidden hidden hidden hidden
Adjusted ROA (FIFO) hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-10-28), 10-K (filing date: 2018-10-11), 10-K (filing date: 2017-10-25), 10-K (filing date: 2016-10-20), 10-K (filing date: 2015-10-28), 10-K (filing date: 2014-10-20).

Financial ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by current liabilities. Walgreens Boots Alliance Inc.’s adjusted current ratio deteriorated from 2017 to 2018 and from 2018 to 2019.
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Walgreens Boots Alliance Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Walgreens Boots Alliance Inc.’s adjusted total asset turnover ratio improved from 2017 to 2018 and 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.’s 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.’s adjusted ROE improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Walgreens Boots Alliance Inc.’s adjusted ROA improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

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


Adjusted Current Ratio

Microsoft Excel LibreOffice Calc
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)
Current assets hidden hidden hidden hidden hidden hidden
Current liabilities hidden hidden hidden hidden hidden hidden
Liquidity Ratio
Current ratio1 hidden hidden hidden hidden hidden hidden
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted current assets hidden hidden hidden hidden hidden hidden
Current liabilities hidden hidden hidden hidden hidden hidden
Liquidity Ratio
Adjusted current ratio2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-10-28), 10-K (filing date: 2018-10-11), 10-K (filing date: 2017-10-25), 10-K (filing date: 2016-10-20), 10-K (filing date: 2015-10-28), 10-K (filing date: 2014-10-20).

2019 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= hidden ÷ hidden = hidden

2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= hidden ÷ hidden = hidden

Liquidity ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by current liabilities. Walgreens Boots Alliance Inc.’s adjusted current ratio deteriorated from 2017 to 2018 and from 2018 to 2019.

Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
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. hidden hidden hidden hidden hidden hidden
Sales hidden hidden hidden hidden hidden hidden
Profitability Ratio
Net profit margin1 hidden hidden hidden hidden hidden hidden
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. hidden hidden hidden hidden hidden hidden
Sales hidden hidden hidden hidden hidden hidden
Profitability Ratio
Adjusted net profit margin2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-10-28), 10-K (filing date: 2018-10-11), 10-K (filing date: 2017-10-25), 10-K (filing date: 2016-10-20), 10-K (filing date: 2015-10-28), 10-K (filing date: 2014-10-20).

2019 Calculations

1 Net profit margin = 100 × Net earnings attributable to Walgreens Boots Alliance, Inc. ÷ Sales
= 100 × hidden ÷ hidden = hidden

2 Adjusted net profit margin = 100 × Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. ÷ Sales
= 100 × hidden ÷ hidden = hidden

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

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
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)
Sales hidden hidden hidden hidden hidden hidden
Total assets hidden hidden hidden hidden hidden hidden
Activity Ratio
Total asset turnover1 hidden hidden hidden hidden hidden hidden
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Sales hidden hidden hidden hidden hidden hidden
Adjusted total assets hidden hidden hidden hidden hidden hidden
Activity Ratio
Adjusted total asset turnover2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-10-28), 10-K (filing date: 2018-10-11), 10-K (filing date: 2017-10-25), 10-K (filing date: 2016-10-20), 10-K (filing date: 2015-10-28), 10-K (filing date: 2014-10-20).

2019 Calculations

1 Total asset turnover = Sales ÷ Total assets
= hidden ÷ hidden = hidden

2 Adjusted total asset turnover = Sales ÷ Adjusted total assets
= hidden ÷ hidden = hidden

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Walgreens Boots Alliance Inc.’s adjusted total asset turnover ratio improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
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 hidden hidden hidden hidden hidden hidden
Total Walgreens Boots Alliance, Inc. shareholders’ equity hidden hidden hidden hidden hidden hidden
Solvency Ratio
Financial leverage1 hidden hidden hidden hidden hidden hidden
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted total assets hidden hidden hidden hidden hidden hidden
Adjusted total Walgreens Boots Alliance, Inc. shareholders’ equity hidden hidden hidden hidden hidden hidden
Solvency Ratio
Adjusted financial leverage2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-10-28), 10-K (filing date: 2018-10-11), 10-K (filing date: 2017-10-25), 10-K (filing date: 2016-10-20), 10-K (filing date: 2015-10-28), 10-K (filing date: 2014-10-20).

2019 Calculations

1 Financial leverage = Total assets ÷ Total Walgreens Boots Alliance, Inc. shareholders’ equity
= hidden ÷ hidden = hidden

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Walgreens Boots Alliance, Inc. shareholders’ equity
= hidden ÷ hidden = hidden

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.’s adjusted financial leverage ratio increased from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
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. hidden hidden hidden hidden hidden hidden
Total Walgreens Boots Alliance, Inc. shareholders’ equity hidden hidden hidden hidden hidden hidden
Profitability Ratio
ROE1 hidden hidden hidden hidden hidden hidden
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. hidden hidden hidden hidden hidden hidden
Adjusted total Walgreens Boots Alliance, Inc. shareholders’ equity hidden hidden hidden hidden hidden hidden
Profitability Ratio
Adjusted ROE2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-10-28), 10-K (filing date: 2018-10-11), 10-K (filing date: 2017-10-25), 10-K (filing date: 2016-10-20), 10-K (filing date: 2015-10-28), 10-K (filing date: 2014-10-20).

2019 Calculations

1 ROE = 100 × Net earnings attributable to Walgreens Boots Alliance, Inc. ÷ Total Walgreens Boots Alliance, Inc. shareholders’ equity
= 100 × hidden ÷ hidden = hidden

2 Adjusted ROE = 100 × Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. ÷ Adjusted total Walgreens Boots Alliance, Inc. shareholders’ equity
= 100 × hidden ÷ hidden = hidden

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

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
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. hidden hidden hidden hidden hidden hidden
Total assets hidden hidden hidden hidden hidden hidden
Profitability Ratio
ROA1 hidden hidden hidden hidden hidden hidden
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. hidden hidden hidden hidden hidden hidden
Adjusted total assets hidden hidden hidden hidden hidden hidden
Profitability Ratio
Adjusted ROA2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-10-28), 10-K (filing date: 2018-10-11), 10-K (filing date: 2017-10-25), 10-K (filing date: 2016-10-20), 10-K (filing date: 2015-10-28), 10-K (filing date: 2014-10-20).

2019 Calculations

1 ROA = 100 × Net earnings attributable to Walgreens Boots Alliance, Inc. ÷ Total assets
= 100 × hidden ÷ hidden = hidden

2 Adjusted ROA = 100 × Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. ÷ Adjusted total assets
= 100 × hidden ÷ hidden = hidden

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Walgreens Boots Alliance Inc.’s adjusted ROA improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.