Common-Size Income Statement
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Walgreens Boots Alliance Inc. pages available for free this week:
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
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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).
- Cost of Sales and Gross Profit
- The cost of sales as a percentage of sales showed a clear upward trend from -71.77% in 2014 to -78.03% in 2019, indicating increasing costs relative to sales. Correspondingly, gross profit showed a declining trend, decreasing from 28.23% in 2014 to 21.97% in 2019, reflecting squeezed margins over the period.
- Selling, General and Administrative Expenses
- SG&A expenses consistently decreased as a percentage of sales from -23.55% in 2014 to -18.44% in 2019, suggesting effective cost control or operational efficiencies, which partially offset the adverse impact of rising cost of sales on profitability.
- Equity Earnings
- Equity earnings in AmerisourceBergen first appeared in 2016 and showed a generally positive but modest contribution, rising from 0.03% to 0.15% by 2018 before declining slightly in 2019. Equity earnings in Alliance Boots were reported only in 2014 and 2015, showing a declining pattern from 0.81% to 0.3%, after which data are missing.
- Operating Income
- Operating income demonstrated variability, starting at 5.49% in 2014, decreasing to 4.51% in 2015, recovering somewhat to 5.11% in 2016, then gradually declining to 3.65% by 2019. The overall downward trajectory in later years aligns with increased cost of sales outpacing gains in SG&A expense reductions.
- Other Income and Expenses
- Other income (expense) fluctuated over the years, with negative impact in 2014 (-0.63%) turning positive in subsequent years, reaching 0.17% in 2019. This suggests improved contributions from non-operating activities or better management of other income and expenses.
- Earnings Before Interest and Taxes
- Earnings before interest and income tax provision peaked at 5.72% in 2015 but showed a declining trend thereafter, falling to 3.82% in 2019, reflecting pressures on operating profitability consistent with trends noted in operating income.
- Interest Expense
- Net interest expense increased in 2015 to -0.58% before stabilizing around -0.5% in subsequent years, indicating a relatively stable but notable cost of debt service over the period.
- Earnings Before Income Tax and Income Tax Provision
- Earnings before income tax declined from 4.66% in 2014 to 3.31% in 2019, indicating reduced pre-tax profitability. The income tax provision decreased substantially from -2.00% to -0.43% in 2019, which could reflect changes in tax rates, tax planning strategies, or lower taxable income.
- Net Earnings
- Net earnings attributable to the company showed volatility with an increase from 2.53% in 2014 to a peak of 4.08% in 2015, followed by fluctuations and a declining trend after 2018, ending at 2.91% in 2019. The decline in the latest year suggests shrinking bottom-line profitability relative to sales.
- Net Earnings Attributable to Noncontrolling Interests
- The net earnings loss attributable to noncontrolling interests diminished over time, moving from a negative contribution in earlier years towards a neutral or slightly positive contribution in 2019, indicating reduced outside ownership impact on net income.
- Overall Analysis
- Throughout the 2014-2019 period, the company experienced increasing cost pressures as seen in rising cost of sales, which eroded gross profit margins. While SG&A expenses were well controlled, contributing to some margin relief, the overall profitability metrics such as operating income, EBIT, and net earnings showed a downward trend, especially in the latter years. Equity earnings contributed modestly and inconsistently to profitability. Interest expenses remained stable but present. The reduction in income tax provision as a percentage of sales partially cushioned after-tax earnings. The combination of these factors resulted in net earnings as a percent of sales declining towards the end of the period, underscoring challenges in maintaining profitability amid rising costs and competitive pressures.