Analysis of Revenues
Difficulty level: Advanced
Revenue is recognized when: (a) persuasive evidence of an arrangement exists, (b) delivery has occurred or services have been rendered, (c) the seller's price to the buyer is fixed or determinable, and (d) collectability is reasonably assured. The following revenue recognition policies have been established for Walgreens Boots Alliance's reportable segments.
Retail Pharmacy USA and Retail Pharmacy International
Walgreens Boots Alliance recognizes revenue at the time the customer takes possession of the merchandise, after making appropriate adjustments for estimated returns. Revenue does not include sales related taxes. In certain international locations, Walgreens Boots Alliance initially estimates revenue based on expected reimbursements from governmental agencies for dispensing prescription drugs and providing optical services. The estimates are based on historical experience and are updated to actual reimbursement amounts.
Wholesale revenue is recognized upon shipment of goods, which is generally also the day of delivery. When Walgreens Boots Alliance acts in the capacity of an agent or a logistics service provider, revenue is the fee received for the service and is recognized when the services have been performed. Walgreens Boots Alliance has determined it is the agent when providing logistics services, which is based on its assessment of the following criteria: (a) whether it is the primary obligor in the arrangement, (b) whether it has latitude in establishing the price, changing the product or performing part of the service, (c) whether it has discretion in supplier selection, (d) whether it is involved in the determination of service specifications, and (e) whether it is exposed to credit risk.
Source: Walgreens Boots Alliance Inc., Annual Report
Walgreens Boots Alliance Inc., Income Statement, Revenues
USD $ in millions
|12 months ended||Aug 31, 2015||Aug 31, 2014||Aug 31, 2013||Aug 31, 2012||Aug 31, 2011||Aug 31, 2010|
|Retail Pharmacy USA||80,974||76,392||72,217||71,633||72,184||67,420|
|Retail Pharmacy International||8,657||–||–||–||–||–|
|Sales to external customers||103,444||76,392||72,217||71,633||72,184||67,420|
Source: Walgreens Boots Alliance Inc. Annual Reports
|Sales to external customers||Aggregate revenue recognized during the period (derived from goods sold, services rendered, insurance premiums, or other activities that constitute an entity's earning process). For financial services companies, also includes investment and interest income, and sales and trading gains.||Walgreens Boots Alliance Inc.'s sales to external customers increased from 2013 to 2014 and from 2014 to 2015.|