ACCT 302 THE FINANCIAL REPORTING CASE (FRC)

ACCT 302

THE FINANCIAL REPORTING CASE         __Walgreen co._____________________________

 

Spring 2011


 Name of the company (PRINT)

 

 

 

 

Last Name________________________________

 

First Name________________________________ Section No.: ______

 

 

 

IMPORTANT:   

 

a.   ALL answers must be fitted, using blue ink, in the spaces provided and on the line(s)

drawn for each question.

b.   Your ability to understand and follow the instructions herein is a factor in grading your

work.

c.   The report neatness and legibility have 10% of the points for the report.

d.   Your primary source should be the form 10-K for your company.

 

 

 

 

A. General Information (4 points) 

 

 

1.   The company’s fiscal year ends on what date?


 

___August 31st ___________

 

 

Address of the Company’s Headquarter: __ 200 Wilmot Road, Deerfield, Illinois. Zip code: 60015.__________________

 

Nature of the Company’s business:

 

Walgreen Co. together with its subsidiaries operates the largest drugstore chain in the United States.  They provide their customers with convenient, multichannel access to consumer goods and services, and pharmacy, health and wellness services in communities across America.  They offer their products and services through drugstores, as well as through mail, by telephone, and via the Internet.

 

Basically they sell prescription and non-prescription drugs as well as general merchandise, including household products, convenience foods, personal care, beauty care, candy, photofinishing and seasonal items. Their pharmacy services includes retail, specialty, infusion, medical facility, long- term care and mail service, along with pharmacy benefit solutions and respiratory services.

_________________________________________________________________________

 

 

What is the company’s standard industry classification? (Give both)

 

 

Standard Industry Name: RETAIL-DRUG STORES AND PROPRIETARY STORES

 

Standard Industry Code (4-digits):           5912

 

 

 

Page 1-6


 

 

 

 

 

 

B. Investments (6 points)

 

1.   What is (are) the classification(s) and amount of any investment in securities reported in the

company’s Financial Statements and/or the Notes attached thereto (i.e. Trading Securities, Available-for-

sale, etc., as covered in the Investments chapter of the textbook)?

 

 

Classification  

 

______________________________________

 

______________________________________

 

______________________________________

 

______________________________________


 

Amount

 

________________

 

________________

 

________________

 

________________

 

 

2.  Where are the unrealized gains or losses from investments in available-for-sale securities

reported? (Mark with X)

 

 

In the shareholders’ equity section

 

In the footnotes

 

What is the amount?


 

_______________

 

_______________

 

_______________

 

 

 

3.  Which methods of accounting are used for the above investments in securities? List.

 

_____________________________________________

 

_____________________________________________

 

_____________________________________________

 

_____________________________________________

 

 

C.) Liabilities (6 points)

 

 

1.   What are the total liabilities reported on the balance sheet?


 

_$11,875,000,000_____________

 

 

2.    Calculate the debt to total assets ratio for (use the formula from your textbook):

 

Last Year___0.45________       Current Year ____0.43______

 

3.   What is the industry average debt/total assets ratio for the current year?           0.4_______

(The industry averages are available in the Reference Section of the library; ask attendants

for referral.  Use the SIC you gave in part “A” to find the average.)

 

 

ACCT 302—Spring 2011


Page 2-6


 

 

 

 

D. Leases (6 points)

 

1.   From the disclosure notes, determine:

 

 

Types of leases (based on the Chapter on Leases)

 

___________________________________  

 

___________________________________  

 

___________________________________  


 

 

 

 

 

 

 

 

 

 

Amount of the

lease obligation, if any.         

 

____________________

 

____________________

 

____________________

 

 

 

2.    What did the company report as its future minimum annual rental commitments under

non-cancellable leases?

________________

 

 

 

 

E.  Stockholders’ Equity (8 points)

 

1.  At the end of the year, how many shares of common stock did the company have in the following categories?

 

 

Authorized

 

Issued

 

Outstanding

 

 

2.  What is the par value per share of the common stock?

 

 

 

3. Does the company have any treasury stock?  Yes  /  No (circle one); if yes:

 

How many shares?

 

What is the amount?


 

______________

 

______________

 

_ 929,744,049 _____________

 

 

____ $0.0625 __________

 

 

 

 

 

 

______________

 

$______________

 

 

 

 

4.  Did the company split its stock in the current year?

 

If yes, in what ratio?

 

 

 

 

ACCT 302—Spring 2011


 

 

 

Yes  /  No   (circle one) No

 

______________

 

 

 

 

Page 3-6


 

 

 

F.  Compensations (10 points)

 

1.  From the proxy statement filed with the SEC, what was the total annual monetary compensation paid to

the company’s Chief Executive Officer? (Salary plus cash bonuses)

______________

 

2.  From the disclosure notes, find the following pension information for the current year:

 

Type of pension plan (Defined Benefit or Defined Contribution, or both):

 

___________________________________________________________________________

 

Cash contributions made into the plan by the company    ___________________________

 

The balance of Projected Benefit Obligation (PBO)          ___________________________

 

 

The interest rate used in estimating the PBO

 

What is the year-end funded status of the company?

Circle one:

 

and

 

Show the amount:

 

3.   Does the company have any stock compensation plans?

 

Yes  /  No (circle one);  if yes:

 

a.  What are the types of plans?  List


 

___________________

 

 

Over-funded/Under-funded,

 

 

 

____________________________

 

 

_____________________________________________

 

_____________________________________________

 

_____________________________________________

 

b.   What additional information does the company provide in its footnotes about the compensation

plans? (Be brief)

 

________________________________________________________________________________

 

_________________________________________________________________________________

 

_________________________________________________________________________________

 

_________________________________________________________________________________

 

part two

It is pertinent to close Nice 2 since according to the operating profits obtained in all the case scenarios, they are by far better in relation to when both Nice 1 and Nice 2 are operational. That is,

Scenario Operating profit  (000€) Total (000€)
Nice 1 75  
Nice 2 34 109
Nice 1 without renovations 163 163
Nice 1 with renovations year 2010 205.5 205.5
Nice 1 with renovations year 2011-2014 249 249

 

 

It is important to further note that Nice 2 was recently acquired and thus it still experiencing “teething problems” that may include getting a loyal clientele. Given a chance, Nice 2 may over time attain a better operating profit of more than € 75,00 which is Nice 1s’ considering it has been around for 20 years whereas Nice 2 was just recently acquired and attained an operating profit of € 34,000!

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