A critical financial accounting skill is the ability to read, analyze, and make actionable decisions from any
financial statement. Business leaders gain valuable information from the annual reports of direct
competitors, companies that operate in similar fields, and companies in which they are considering an
investment or partnership.
You are the CFO of a family owned beauty care manufacturing firm and are looking to partner with a large
drug retailer to be the exclusive retailer of your product line. Your CEO has narrowed the field down to two
retailers and is requesting your analysis and guidance. She has asked you to do a financial review of recent
results from CVS Health Corp (NYSE: CVS) and Rite Aid Corp (NYSE: RAD). You have decided to
organize your work into TWO components:
Part A: Financial Analysis Snapshot of key data from the annual reports
Part B: Executive Memo and brief Video Presentation of your analysis
Part A: Financial Analysis Snapshot
• Who does a better job managing their inventory (Inventory Days on Hand ratio)?
• What are their respective 3-year trends for Inventory DOH?
• What options could the company consider to improve inventory management?
3. Cash Is King
• How much net cash from operations did each company generate last year?
• Which company has done a better job generating cash from operations?
• In layman’s terms, how is each company spending their cash with respect to reinvestments in
the business, changes in debt, and returning money to shareholders?
• How do the companies compare in terms of the current ratio, and what are their respective 3-
• Do their current ratios indicate that either of these companies could go bankrupt soon?
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