Written Assignment- Analyzing Receivables & Liquidity of a Company - Financial Accounting Concepts
1. What is an account receivable? What other names does this asset go by?
2. How do accounts receivable differ from notes receivable?
3. What is included in CVS' accounts receivable, net calculations?
4. What distinguishes a current liability from other liabilities?
5. What is CVS major current asset and current liability?
Analysis For CVS
1. Calculate receivable turnover and Day's Sales uncollected.
2. Compare to Walgreens (for the last 5 years) and the industry average (for the current year.
3. Comment on the increase or decrease in CVS' receivables give reasons for any fluctuation.
4. Do you discern any differences in the two companies' credit policies, if so, explain.
5. Does CVS or Walgreens factor their receivables, and how does this impact your analysis?
6. Calculate liquidity ratios (current and quick rations) for the last five years.
7. Compare to Walgreens (for the last 5 years) and the industry average (for the current year).
8. Comment on the increase or decrease in CVS' liquidity, has it improved or declined? How does it compare to Walgreens, as well as the industry average?
Reference:
Text: Financial Accounting: Tools for Business Decision Making
Author: Kimmel, Weygandt, Kieso
Publisher: Wiley
Ed/Year: 7th/2013
ISBN-13 (hard cover): 978-1118162286
ISBN (e-text): 978-1118562178
Morning Star Financial History
Directions for Locating the Data for the Five Year Information
1. financials.morningstar.com/ratios/r.html?t=CVS
2. Select Key Ratios
3. Scroll Down to the Section you need:
A. Profitability
B. Growth
C. Cash Flow
D. Financial Health
E. Efficiency Ratios.