Financial Ratios of Rite Aid for the year ending in April of 2014.
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Liquidity ratios measure a company’s ability to meet their short-term obligations
with current assets.
o Current ratio = Current assets/ Current liabilities
 4258.12 / 2507.45=1.6981
o Quick ratio = (Current assets – Inventories) / Current liabilities
 2993.95=1264.17/2507.45=0.5042
o These numbers indicate that Right Aid is good standing to pay short-term
liabilities with its short-term assets.
Solvency ratios provide analysis of the ability of a company to pay their longterm debt.
o Debt ratio = Total debt / Total assets
 5757.14/6944.87=.8289
o Debt to equity ratio (D/E) = Total debt / Total Equity
 5757.14/ (2113.70) = (2.7237)
o Times interest earned ratio = Earnings before interest and tax / Interest
charges
 658.82/424591.00=.0015
o These ratios show that Rite Aid has a very high debt and therefore is not
very solvent, but in comparison with previous years it is moving in a
positive direction.
Asset Management ratios are used to analyze how well a company generates
revenue with the use of their assets.
o Inventory turnover ratio = Cost of goods sold / Inventories
 18,202.68 / 2,993.95 = 6.08
o Total asset turnover ratio = Sales / Total assets
 25,526.41 / 6,944.87 = 3.675
o There has not been significant growth in this category of ratios, but this
ratio has remained consistent.
Profitability ratios of a company measures how efficiently a company is in
generation revenue in comparison with sales, assets and equity.
o Return on sales = Earnings after tax / Sales
 249.41/25526.41=.0097
o Return on total assets = Earnings after taxes / total assets
 249.41/69944.87=.0035
o Return on total equity = Earnings after taxes/ total equity
 249.41/(2113.70)=(.1179)
o Rite Aid has turned the corner on what could have been disaster for the
company a few years ago and are now are focusing on growing.
Market values are useful in evaluating the economic state of a company.
o Earnings per share = Earnings after tax / Shares outstanding
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o Price to earnings ratio (P/E) = Cost per share / EPS
 $7.16 / $0.22 = $32.11
o After five straight years of poor market value performance Rite Aid is
trend is positive with a substantial EPS gain in the market place.
Rite Aid’s two major competitors are Walgreens and CVS, in a peer analysis the
following conclusion can be made;
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Liquidity Ratios
o Rite Aid’s current ratio over the last three years has been consistently
higher than its two competitors’ CVS and Walgreens, although all three
are in good standing to pay short-term liabilities, Rite Aid is more
favorable as it is closer to two. Rite Aid and Walgreen’s quick ratio has
stayed consistent and satisfactory. CVS shows encouraging signs with a
quick ratio slightly higher than its two other competitors. All three
companies have a current ratio higher than the quick ratios, which
indicates that they rely heavily on efficient inventory turnover to keep
them afloat in the short-term.
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Solvency Ratios
o The three solvency ratios are far inferior to that of Rite Aid’s two major
competitors, which are Walgreens and CVS. The company still has very
bad numbers but, the growth seems to be closing the gap.
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Asset Management Ratios
o With an inventory turnover ratio of 6.08 Rite Aid is behind their
competitors, CVS and Walgreens. While in comparison with CVS and
Walgreens shows Rite Aid is on top with a total asset turnover ratio of
3.68.
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Profitability Ratios
o Amongst its peers, Rite-Aid is number three behind CVS and Walgreen’s.
Both CVS and Walgreen more than triple the return on sales numbers
above Rite-Aid. Where return on assets and return on equity is concerned,
they are even further ahead leaving Rite-Aid a distant third. Walgreen’s
and CVS are very similar in their profitability, but Rite-Aid has nowhere
to go but up and is making strides to do so.
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Market Value Ratios
o EPS and PE are driven by the stock price. When looking back over the
past five years, the most stable of the stocks in this sector was CVS. EPS
is positive for the main competitors CVS and Walgreens. The EPS for
CVS year over year was only 8% compared to the robust 43% increase
realized by Rite Aid. Walgreens had the least amount of growth during
this period and the EPS has not yet returned to what it was in 2011.
Presented by Team A – Kate Daisher, Jenny Engle, Jim Hamilton, Kate Hamilton
& Ruth Kowalk