Running head: CVS CAREMARK FINANCIAL ANALYSIS
CVS Caremark Financial Analysis
Team D: Catherine Alvarez, Rochelle Betton-Ford, Lee Ann Gober, Brittany Lane, and
Stevia Simpson-Ross
Siena Heights University
LDR640 Financial Systems Management
Professor: Lihua Dishman
May 17, 2012
1
CVS CAREMARK FINANCIAL ANALYSIS
2
Abstract
CVS Caremark has been in business for over 20 years. It is one of the leading pharmacy stores in
the nation. The goal of this financial analysis is to show some of CVS Caremark financial data
that will provide a look into why this company has been a strong and top competitor in the drug
store industry. Information has been gathered from CVS Caremark’s 2010 and 2011 balance
sheets, income statements, and statement of cash flows. An analysis of 12 CVS Caremark’s
financial ratios has been chosen. A trend analysis which covers the period of 2009 through
December 2011 and an analytical report of CVS Caremark’s financial ratios have also been
included in this report to give a brief overview of CVS’ financial status and their increased rate
of success.
Additionally, a Peer Group Analysis, using the same 12 ratios as CVS Caremark will be
used as a comparison with pharmacy competitors Walgreens and Rite Aid. Moreover, a
Diagnostic Report will be given as an assessment of what CVS Caremark could or perhaps
should do differently via recommendations for CVS Caremark to remain a viable and profitable
corporation. Lastly, our conclusion which is based on CVS Caremark’s financial status, is a
summary of the direction which could be beneficial to the company and its shareholders.
CVS CAREMARK FINANCIAL ANALYSIS
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Table of Contents
Page
Number
Abstract
2
Introduction
4
Financial Ratio Calculation and Analysis
6
Financial Ratio and Trend Analysis
7
Peer Group Analysis
10
Diagnostic Report
12
Recommendations and Conclusion
15
Appendices
Consolidated Statement of Income
17
Consolidated Balance Sheets
18
Consolidated Statements of Cash Flows
20
References
22
CVS CAREMARK FINANCIAL ANALYSIS
4
CVS Caremark Financial Analysis
Often times there is a period in one’s life when they become sick. Hopefully, the times
will be few and far between. However, when that time comes a visit to the doctors’ office may be
needed. After receiving a diagnosis, the doctor in some cases writes a prescription for
medication. The goal of the physician is to help the patient become well and many times that is
accomplished from a prescription. Then the patient needs to follow through with the physician’s
orders and find a good pharmacy that he respects and trust.
CVS/Pharmacy, the retail division of CVS Caremark Corporation is America’s leading
retail pharmacy with more than 7,300 CVS Caremark stores and access to a network of more
than 65,000 pharmacies (CVS Caremark: Facts).
CVS Caremark is a market leader in mail order pharmacy, specialty pharmacy, and retail
clinics. CVS is also a leader in servicing providers of Medicare Part D Prescription Drug Plans.
CVS Caremark offers a signature Pharmacy Advisor Program, an innovative Generic Step
Therapy Program, and a Genetic Benefit Management Program that promotes cost effective,
healthier behaviors and improved health care outcomes.
CVS stores have come a long way since its beginning in 1963. The store was founded in
Lowell, Massachusetts by brothers Stanley and Sidney Goldstein and partner Ralph Hoagland.
This original location started by selling health and beauty products. The acronym CVS stands for
Consumer Value Stores (CVS Caremark: History). CVS growth in sales has been a major factor
for the company to acquire many drug stores such as: Mack Drugs, Arbor Drugs, People Drugs,
Revco Drugs, Clinton Drugs and Discounts Stores, and Eckerd drug stores. By 1974 CVS
achieved sales of 100 million and by the 1985 sales reached one billion. In 1996, CVS
Corporation became a standalone company trading on the New York Stock Exchange under the
CVS CAREMARK FINANCIAL ANALYSIS
5
ticker CVS. In 2007 CVS Corporation and Caremark Rx, Inc. completed their transformative
merger, creating CVS Caremark as we know it today (CVS Caremark: History).
Today, CVS Caremark has achieved sales of more than $107 billion in annual revenue.
CVS Caremark is still maintaining the vision, mission, and values of its founders with a purpose
of helping people in their path to better health by reinventing pharmacy (CVS Caremark 10-K,
2011). Their annual income statement, balance sheet, and cash flow report provides to its
shareholders the required year-end figures.
Conducting a financial analysis of CVS Caremark using the company’s Financial
Statements for years 2010 and 2011 respectively will provide detailed insight into the financial
health of the company. A financial analysis is the selection, evaluation, and interpretation of
financial data, along with other pertinent information, to assist in investment and financial
decision making.
A financial analysis can prove useful to the CVS Caremark Board of Directors,
managers, payers, lenders, and others who make judgment regarding the financial health of an
organization. It can also prove useful to those who evaluate issues such as employee
performance, the efficiency of operations, credit policies, and externally evaluate potential
investments and the credit worthiness of borrowers (Drake, P. 2012, p. 1). One widely accepted
method of assessing financial statements is by conducting ratio analysis. Most healthcare
systems and healthcare organizations routinely evaluate their financial condition by calculating
various ratios and comparing the values to those for previous periods, looking for differences
that could indicate a meaningful change in the company’s financial condition.
The five groups of ratios are: Liquidity, Profitability, Asset Management, Solvency and
Market Value. Liquidity ratios provide the information regarding a company’s ability to meet its
CVS CAREMARK FINANCIAL ANALYSIS
6
short-term and immediate obligations. Profitability ratios provide information on the amount of
income from each dollar of sales (p. 2). Asset Management Ratios relate information on a
company’s ability to manage its resources efficiently. Solvency measures the size of a
company’s after-tax income, excluding non-cash depreciation expenses, as compared to the
firm's total debt obligations. It provides a measurement of how likely a company will be to
continue meeting its debt obligations. Market Value Ratios evaluate the economic status of your
company in the wider marketplace (p. 3). Many companies compare their ratio values to those of
similar competitors looking for differences that could indicate weakness and or opportunities for
improvement in their industry.
For the purpose of Team D’s Learning Team Project, we have looked at the following
figures for calculation: Liquidity Ratios: Current Ratios and Quick Ratios; Solvency Ratios:
Debt- Ratio, Debt-to-Equity Ratio, Times-Interest-Earned Ratio; Asset Management Ratios:
Inventory Turnover Ratio and Total Assets Turnover Ratio; Profitability Ratios: Return on Sales,
Return on Total Assets, and Return on Total Equity; Market Value Ratios: Earning Per Share and
Price/Earnings Ratios. Based upon our ratio findings, CVS Caremark is continuing to maintain
profitability in this troubled economic market.
Financial Ratio Calculations and Analysis
In Table 1 below you will find twelve (12) ratio calculations for CVS Caremark for fiscal
year 2011. The calculations of ratios cover the following five financial categories: Liquidity,
Asset Management, Solvency, Profitability, and Market Value.
Table 1
Financial Ratios
Liquidity
Current Ratios
Quick Ratios
Calculations
Formula/Calculation Steps/Final Results
Current assets/Current liabilities: 18,594/11,956 = 1.56
Cash +Accounts receivable/Current liabilities =
CVS CAREMARK FINANCIAL ANALYSIS
Calculations
Formula/Calculation Steps/Final Results
Quick Ratio: 1413 + 6047 = 7460/11956 = 0.62
Financial Ratios
Asset Management
Inventory Turnover
Ratio
Total Assets Turnover
Ratio
Solvency
Debt Ratios
Debt to Equity Ratios
Times-Interest-Earned
Ratio
Profitability
Return on Sales
Return on Total Assets
Return on Total Equity
Market Value
Earnings Per Share
Price/Earnings Ratio
7
Cost of goods sold/Ending inventories =
beginning inventory (2010) 10,695 + inventory (2011) 10,046 =
20,741/2 =10,371 (2011) = ending inventory (COGS) 107,100/10,371
= 10.33 = Inventory Turnover Ratio (December 2010 ending inventory
is the beginning inventory for 2011)
Net sales/Total assets = Total Assets Turnover Ratio:
107,100/6,4543 = 1.66
Total liabilities/Total assets = Debt Ratio:
11,956/ 64543 = 0.19
Long term debt + short term debt
Divide stockholders total equity
= Total debt/Total stockholder equity =
Debt to Equity Ratio: 9208 + 750 = 9958/38,051 = 0.26
EBIT/Total interest = Time-Interest-Earned Ratio:
6330/584 = 10.84
EBIT/Sales = Return on Sales: 6330/107100 = 0.06
EBIT/Total Net assets: 6330/64543 = 0.10
Net income after taxes/ Equity = Return on Total Equity:
34610/38051 = 0.91 x10 = 9.10
Earnings after tax/Number of shares outstanding =
Earnings Per Share: 3457/1298 = 2.66
Share price/Earnings per Share = P/Earnings Ratio
40.78/2.66 = 15.33
In summary, the breakdown of Table 1 ratios show that while CVS Caremark has
improved in some areas, the fluctuation of the economy can have extreme affects on any
organization. But with good direction and effective decisions the numbers will and can meet the
expectations that CVS Caremark predict when the reviews are done.
CVS Caremark Financial Ratio and Trend Analysis
Trend Analysis gives details that can be reviewed as to how well a company is doing
overall. A look at financial ratios will also give details as to how the company is performing.
CVS CAREMARK FINANCIAL ANALYSIS
8
Information can also be obtained from CVS Caremark Balance Sheet, Income Statement and
Cash Flow Statements. Table 1 below provides a CVS Caremark Trend Analysis which includes
comparisons of 2009, 2010, and 2011 ratios. The area of concentration includes ratios for
liquidity, assets management, solvency/leverage, profitability, and market value.
Financial Ratios
Liquidity
Current Ratios
Quick Ratios
Asset Management
Inventory Turnover Ratio
Total Assets Turnover
Ratio
Solvency
Debt Ratios
Debt to Equity Ratios
Times-Interest-Earned
Ratio
Profitability
Return on Sales
Return on Total Assets
Return on Total Equity
Market Value
Earnings Per Share
Price/Earnings Ratio
Table 2
2009
2010
2011
1.43
0.53
1.60
0.57
1.56
0.62
9.55
9.01
10.33
1.60
1.55
1.66
0.24
0.31
0.21
0.27
0.21
0.26
11.44
12.16
10.84
0.07
6.00
10.33
0.06
5.51
9.09
2.66
5.36
9.10
2.66
12.70
2.50
13.20
2.66
15.33
Share price performance previous 3 years
CVS CAREMARK FINANCIAL ANALYSIS
9
Liquidity Ratios
This ratio includes current ratios and quick ratios. Table 1 shows that CVS Caremark
current ratios improved from 2009 to 2010 but then slightly deteriorated from 2010 to 2011. The
quick ratio for CVS improved from 2009 to 2010 and from 2010 to 2011. The purpose for
knowing these stats is to give a company an idea if they will be able to meet their short term
debts.
Asset Management Ratios
This area of ratios include CVS Caremark’s inventory turnover and total assets turnover.
In other words this shows how CVS Caremark was able or unable to turn assets, including
inventory, into sales. CVS Caremark assets turnover and inventory turnover has both been up
and down in 2009 and 2010; however, both of these ratios has shown growth in the 2011 trend
analysis.
Solvency Ratios
This area of the ratio chart shows how CVS Caremark is using leverage to finance assets.
In finance, having a debt ratio and debt to equity ratio greater than 20% is an indication that a
company is financially healthy. According to Table 1, CVS Caremark has shown that it is in
good shape, which is great for the company. CVS Caremark has also shown a steady decrease for
interest payout for this period as well.
Profitability Ratios
CVS Caremark has, like other competitors in the pharmacy industry, faced economic
challenges. CVS Caremark has a strong rating among analysts as a stock to buy (Schaeffer,
2012).
CVS CAREMARK FINANCIAL ANALYSIS
10
Market Value Ratios
CVS Caremark has shown that it is a company that is not going to let its competitors take
the lead in the retail drug store industry. Through continued acquisitions and strategic moves in
the industry, its rating to buy will continue. (Yahoo News, 2012).
Peer Group Analysis
The following table presents summary information for 2011 regarding the top
competitors in the pharmacy industry: CVS, Walgreens, and Rite Aid.
Table 3
Financial Ratios
Liquidity Ratios
Current Ratios
Quick Ratios
Solvency Ratios
Debt Ratios
Debt to Equity Ratios
Times-Interest-Earned
Ratio
Asset Management
Ratios
Inventory Turnover
Ratio
Total Assets Turnover
Ratio
Profitability Ratios
Return on Sales
Return on Total Assets
Return on Total Equity
Market Value Ratios
Earnings Per Share
Price-Earnings Ratio
CVS
Caremark
Walgreens
Rite Aid
Industry
1.56
0.62
1.60
0.60
1.80
0.40
1.70
0.70
0.19
0.26
0.46
0.24
1.27
0.40
N/A
0.40
10.84
5.30
0.20
8.10
10.33
6.90
5.40
7.20
1.66
2.70
3.30
2.00
2.66
5.36
9.10
2.93
0.04
17.80
-0.42
-0.42
28.20
0.48
5.10
25.50
2.66
15.33
33.82
11.60
-1.81
-1.81
N/A
17.50
Liquidity Ratios
The higher current ratio means that the company has a higher ability to pay back debt;
Rite Aid has the highest current ratio at 1.80. Ideally, a company would not want to have
CVS CAREMARK FINANCIAL ANALYSIS
11
liabilities higher than current assets because if all the debt had to be paid back in the short- term
the company would not have the ability to do it. All three companies have quick ratios which are
lower than 1:1 which means that the quick assets do not have the ability to pay off its liabilities
quickly. CVS has the largest quick ratio with Walgreens closely following. A company does not
want to have a quick ratio lower than 1:1 because if the company faces financial difficulty it will
not have the ability to pay off current debt. The larger the liquidity ratio, the better the ability the
company has to satisfy its short-term obligations.
Solvency Ratios
Debt ratio indicates what proportion of debt a company has relative to its assets. When
the debt ratio is high, the company is in a financial crisis. Once a company reaches an extremely
high debt ratio, the creditors may require repayment which could lead to bankruptcy. Typically,
a debt ratio less than 1 or 100% means the company needs less debt to finance its assets. CVS
has the lowest debt ratio of 19% which means CVS only rely on 19% of its debt to finance
assets. Rite Aid has a high debt ratio at 127% which means the company should try to lower its
debt ratio.
Asset Management Ratios
CVS is well ahead of the pack, almost doubling their inventory turnover ratio. The other
two companies are doing a fairly good job managing their inventories as shown in the ratios.
Walgreens and Rite Aid have close ratios and are below the industry standards, this means these
companies need to better manage their inventory and improve on eliminating their inventory.
Profitability Ratios
The return on assets ratio shows how profitable a company’s assets are in generating
revenue. Walgreens is better at operations with Return on Assets (ROA) around 10%, while CVS
CVS CAREMARK FINANCIAL ANALYSIS
12
is around 5%, and Rite Aid is at -5%. CVS Caremark surpasses Walgreens and Rite Aid
combined in Return on Sales. Return on Equity (ROE) is important for investors because it
shows how profitable a company is for its shareholders. Rite Aid had the best ROE which was
above the industry standard followed by Walgreens.
Market Value Ratios
Earnings per share are used to gauge a company’s profitability per unit of shareholder
ownership. This is another area where CVS fell behind the other two companies. CVS Caremark
has a high price earnings ratio at 15.33. Compared to industry average (-1.81) Rite Aid is
extremely low. The higher the P/E ratio, the more money the investor is expecting for return. A
P/E ratio of 0-10 indicates that either the stock is undervalued or the company’s sales have
declined. A P/E ratio of 10-17 means it is usually the fair value while a P/E of 17-25 means that
the company’s earnings have increased.
Presently CVS Caremark is healthy and strong. This fact says it all: CVS Caremark’s
market capitalization surpasses Walgreens and Rite Aid. Market capitalization expresses the total
dollar value of a public company. CVS is bigger and has a higher P/E. CVS is the industry leader
with Walgreens following and Rite Aid at the bottom. Rite Aid has the largest debt ratio of the
three.
Diagnostic Report
CVS Caremark experienced strong financial results and accomplishments in 2011 and
has set a solid foundation for future growth. Net revenues increased $11.3 billion in 2011
compared to 2010, and decreased $2.4 billion in 2010 compared to 2009. During 2011, net
revenues in the Retail Pharmacy segment increased 3.9 % and net revenues in the Pharmacy
Services segment increased 24.9% compared to the prior year. Gross profit increased $342
CVS CAREMARK FINANCIAL ANALYSIS
13
million in 2011, to $20.6 billion or 19.2 % of net revenues as compared to $20.2 billion in the
prior year (CVS Caremark 10-K, 2011).
During 2011, CVS Caremark Gross Profit increased $342 million, to $20.6 billion or
19.2% of net revenues as compared to $20.2 billion in 2010. Gross profit decreased $139 million
in 2010, to $20.2 billion or 21% of net revenues, as compared to 2009 (CVS Caremark 10-K,
2011). The decline in gross profit as a percent of net revenues was driven by the increased
weighting toward Pharmacy Services whose gross profit margin tends to be lower than that of
the Retail Pharmacy segment. CVS gross profit as a percentage of revenues benefited from the
increase in their total generic dispensing rate, which increased to 74% and 75% in 2011 and 2010
respectively, compared to the generic dispensing rate of 68% in 2009 (CVS Caremark 10-K,
2011). These increases can be attributed to the new generic drug introductions and the
company’s continued efforts to encourage plan members to use generic drugs when they are
available. Retail Pharmacy increased by 2.5% offset by declines in the Pharmacy Services
segment by 1.1%, compared to the prior year. CVS Caremark had a great year of
accomplishment in 2011; the Company reported solid financial results. The retail business
continued to post strong top- and bottom-line results, and our PBM enjoyed strong revenue
growth.
On November 1, 2011, the CVS Caremark completed the sale of its TheraCom, L.L.C.
("TheraCom") subsidiary to AmerisourceBergen Corporation for $250 million, subject to a
working capital adjustment. TheraCom is a provider of commercialization support services to the
biotech and pharmaceutical industry. The TheraCom business has historically been part of the
Company's Pharmacy Services segment. The results of the TheraCom business are presented as
discontinued operations and have been excluded from both continuing operations and segment
CVS CAREMARK FINANCIAL ANALYSIS
14
results for all periods presented. The Company recognized a $53 million pre-tax gain and a $37
million after tax loss on the sale of TheraCom. The after tax loss was caused by the income tax
treatment of TheraCom's nondeductible goodwill (PR Newswire, 2012).
During the three months ended December 31, 2011, CVS Caremark opened 24 new retail
drugstores and closed one. In addition, the company relocated five retail drugstores. As of
December 31, 2011, the Company operated 7,404 locations, included in which were 7,327 retail
drugstores, 30 onsite pharmacies, 31 retail specialty pharmacy stores, 12 specialty mail order
pharmacies, and 4 mail order pharmacies in 44 states, the District of Columbia, and Puerto Rico
(PR Newswire, 2012).
Based upon the trend analysis for CVS’ ability to meet their short term debt, the current
ratios improved from 2009 to 2010, but slightly deteriorated from 2010 to 2011. The Quick
ratios improved from 2009, 2010 and 2011. The assets turnover and total asset turnover
fluctuated in 2009 and 2010, while there was growth in 2011. The company’s debt ratio and debt
equity ratios is greater than 20% which indicates the company is financially healthy. This is
further demonstrated by the company’s strong profitability ratios.
Comparing CVS Caremark with its competitors, CVS’ market capitalization and
revenues exceed both Walgreens and Rite Aid. CVS also lead in the debt rate comparison with
ratios of 0.21, 1.27, and 0.46 for CVS Caremark, Rite Aid and Walgreens respectively. Rite Aid
has the highest debt ratio at 127%. While each of the three companies analyzed are doing
relatively well managing their inventories CVS is achieving exceedingly well in this area. CVS
surpasses the combined revenues of Walgreens and Rite Aid. The Peer Analysis shows that CVS
is the industry leader in pharmacy followed by Walgreens and then Rite Aid.
CVS CAREMARK FINANCIAL ANALYSIS
15
Recommendations
CVS Caremark is still a very viable force in the retail drug store industry. This company
is taking steps to evaluate what is best for the company and its shareholders. Profits are expected
to continue to grow under the current Board of Directors. Some recommendations for better
results in 2012:

Anticipate benefits from prescription transfers from Walgreens.

Continue profit making acquisitions (i.e., UAM Medicare Part-D business).

Continue with developing and improving operating profits in both Pharmacy Services
and Retail Pharmacy segments.

Research and expand key initiatives for CVS Caremark.

Create new integrated offerings.

Streamline where necessary.
Conclusion
CVS Caremark has a long profitable future ahead. They appear to be making real-time
adjustments as needed. Even in these difficult economic times, CVS Caremark has kept its
integrity, keeping with the visions of its founders. President and Chief Executive Officer Larry
Merlo have continued to make CVS Caremark and its subsidiaries a strong sought after stock.
CVS CAREMARK FINANCIAL ANALYSIS
Appendices
16
CVS CAREMARK FINANCIAL ANALYSIS
17
Financial Statements of CVS Caremark
Consolidated Statements of Income
In millions, except per share amounts
Net revenues
Cost of revenues
$
December 31,
2011
2010
107,100 $
95,778
86,539
75,559
Gross profit
Operating expenses
20,561
14,231
20,219
14,082
Operating profit
Interest expense, net
6,330
584
6,137
536
Income before income tax provision
Income tax provision
5,746
2,258
5,601
2,179
Income from continuing operations
Income (loss) from discontinued operations, net of tax
3,488
(31 )
3,422
2
Net income
Net loss attributable to noncontrolling interest
3,457
4
3,424
3
Net income attributable to CVS Caremark
$
3,461
$
3,427
Basic earnings per common share:
Income from continuing operations attributable to CVS
Caremark
Loss from discontinued operations attributable to CVS
Caremark
$
2.61
$
2.51
Net income attributable to CVS Caremark
$
Weighted average common shares outstanding
Diluted earnings per common share:
Income from continuing operations attributable to CVS
Caremark
Loss from discontinued operations attributable to CVS
Caremark
Net income attributable to CVS Caremark
2.59
$
1,338
$
2.59
$
2.57
$
0.500
2.49
—
$
1,347
$
2.51
1,367
(0.02 )
Weighted average common shares outstanding
Dividends declared per common share
—
(0.02 )
2.49
1,377
$
0.350
CVS CAREMARK FINANCIAL ANALYSIS
18
Consolidated Balance Sheets
In millions, except per share amounts
Assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net
Inventories
Deferred income taxes
Other current assets
Total current assets
Property and equipment, net
Goodwill
Intangible assets, net
Other assets
Total assets
Liabilities:
Accounts payable
Claims and discounts payable
Accrued expenses
Short-term debt
Current portion of long-term debt
Total current liabilities
Long-term debt
Deferred income taxes
Other long-term liabilities
Commitments and contingencies (Note 13)
Redeemable non-controlling interest
Shareholders’ equity:
Preferred stock, par value $0.01: 0.1 shares authorized; none issued or
outstanding
Common stock, par value $0.01: 3,200 shares authorized; 1,640 shares issued
and 1,298 shares outstanding at December 31, 2011 and 1,624 shares issued
and 1,363 shares outstanding at December 31, 2010
Treasury stock, at cost: 340 shares at December 31, 2011 and 259 shares at
December 31, 2010
Shares held in trust: 2 shares at December 31, 2011 and 2010
Capital surplus
Retained earnings
Accumulated other comprehensive loss
December 31,
2011
2010
$ 1,413
5
6,047
10,046
503
580
$ 1,427
4
4,925
10,695
511
144
18,594
8,467
26,458
9,869
1,155
17,706
8,322
25,669
9,784
688
$ 64,543
$ 62,169
$ 4,370
3,487
3,293
750
56
$ 4,026
2,569
3,070
300
1,105
11,956
9,208
3,853
1,445
11,070
8,652
3,655
1,058
30
34
—
—
16
16
(11,953
(56
28,126
22,090
(172
) (9,030
) (56
27,610
19,303
) (143
)
)
)
CVS CAREMARK FINANCIAL ANALYSIS
19
Total shareholders’ equity
38,051
37,700
Total liabilities and shareholders’ equity
$ 64,543
$ 62,169
CVS CAREMARK FINANCIAL ANALYSIS
20
Consolidated Statements of Cash Flows
In millions
Cash flows from operating activities:
Cash receipts from customers
Cash paid for inventory and prescriptions dispensed by retail
network pharmacies
Cash paid to other suppliers and employees
Interest received
Interest paid
Income taxes paid
December 31,
2011
2010
$ 97,688
(75,148
(13,635
4
(647
(2,406
$ 94,503
) (73,143
) (13,778
4
) (583
) (2,224
)
)
)
)
Net cash provided by operating activities
5,856
Cash flows from investing activities:
Purchases of property and equipment
Proceeds from sale-leaseback transactions
Proceeds from sale of property and equipment
Acquisitions (net of cash acquired) and other investments
Purchase of available-for-sale investments
Sale or maturity of available-for-sale investments
Proceeds from sale of subsidiary
(1,872
592
4
(1,441
(3
60
250
) (2,005
507
34
) (177
) —
1
—
)
Net cash used in investing activities
(2,410
) (1,640
)
Cash flows from financing activities:
Increase (decrease) in short-term debt
Proceeds from issuance of long-term debt
Repayments of long-term debt
Dividends paid
Derivative settlements
Proceeds from exercise of stock options
Excess tax benefits from stock-based compensation
Repurchase of common stock
Other
450
1,463
(2,122
(674
(19
431
21
(3,001
(9
(15
991
(2,103
(479
(5
285
28
(1,500
—
)
Net cash used in financing activities
(3,460
) (2,798
)
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
(14
1,427
) 341
1,086
Cash and cash equivalents at the end of the year
$ 1,413
Reconciliation of net income to net cash provided by operating
4,779
)
)
)
)
)
$ 1,427
)
)
)
)
)
CVS CAREMARK FINANCIAL ANALYSIS
activities:
Net income
Adjustments required to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization
Stock-based compensation
Gain on sale of subsidiary
Deferred income taxes and other noncash items
Change in operating assets and liabilities, net of effects from
acquisitions:
Accounts receivable, net
Inventories
Other current assets
Other assets
Accounts payable
Accrued expenses
Other long-term liabilities
Net cash provided by operating activities
21
$ 3,457
$ 3,424
1,568
135
(53
144
1,469
150
) —
30
(748
607
(420
(49
1,128
85
2
) 532
(352
) (4
) (210
(40
(176
(44
$ 5,856
$ 4,779
)
)
)
)
)
)
CVS CAREMARK FINANCIAL ANALYSIS
22
References
American Psychological Association. (2010). Publication manual of the American Psychological
Association (6th ed., 2nd printing). Washington, DC: APA Press.
CVS Caremark Corp. (CVS) Debt and Solvency. Retrieved from http://www.stock-analysison.net-NYSE/Company/CVS-Caremark-Corp/Ratios/Profitability
CVS Caremark. (n.d.). CVS Caremark. Retrieved April 12, 2012 from: http://infocvscaremark.
com/our-company/history
CVS Caremark. (2012). CVS Caremark. Retrieved April 12, 2012, from: http://
inforcvscaremark.com/corporate-responsibility/aboutreport
Drake, P. P. (2012). Financial ratio analysis. A reading prepared by Pamela Peterson Drake,
1-3.
PR Newswire, United Business Media CVS Caremark Reports Fourth Quarter and Full Year
Results. Retrieved May 1, 2012, from: http://www.prnewswire.com/news-releases/cvscaremark-reports-fourth-quarter-and-full-year-results-2012-guidance-raised-to-reflectanticipated-first-quarter-benefit-of-prescription-transfers-from-walgreens138919549.html
Rite Aid. (n.d.). Rite Aid Corp Quote Page (RAD). Retrieved April 18, 2012, from Rite Aid:
http://www.dailyfinance.com/tmf/proxy?url=http%3a%2f%2f%2fwww.motleyfool.idman
ageds
Yahoo Finance. (n.d.). Rite Aid Corporation Stock. Retrieved April 17, 2012, from Yahoo:
http://finance.yahoo.com/qis?s=RAD+Income+Statement&annual