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Managerial Finance Drug Industry

Submitted by ricovaldez on April 18, 2008

Category: Business
Words: 2270 | Pages: 10
Views: 99
Popularity Rank: 90,515
Average Member Grade: N/A (Add a Comment / Grade this Paper)

ROE = Net Income /Shareholder’s Equity

Managerial Finance Spring 2008 January 11, 2008
Rico Spencer
Financial Ratio and Analysis of Walgreens Company and Rite Aid Corporation 2005, 2006, 2007

1. Introduction
Needless to say, a large percentage of the drugstore industry sales are driven by prescription sales. As the number of aging increases, the necessity for more drugstores will also increase.
The drugstore industry has become increasingly competitive over the past decade. Not only do retail drugstores like Walgreens and Rite Aid compete with each other, they also compete with other retailers including grocery stores, convenience stores, dollar stores, and photography development centers. This competition is only made possible by carrying large and varied inventories as well as market saturation and convenience via prime locations and extended hours.
Front end sales in over the counter nonprescription drugs, as well as beauty and personal care products significantly contribute to the total revenue experienced by these markets and in many cases may be the primary factor for attracting patrons.
2. Company Background
a. Walgreens Company
Walgreen Co. operates a chain of drugstores in the United States. These drugstores sell prescription and non-prescription drugs, and general merchandise. General merchandise includes beauty care, personal care, household items, candy, photofinishing, greeting cards, seasonal items, and convenience food. The company provides its services through drugstore counters, as well as through the mail, by telephone, and on the Internet. As of October 24, 2007, Walgreen operated 6,014 stores in 48 states and Puerto Rico. The company was founded in 1901 and is based in Deerfield, Illinois. (5)
b. Rite Aid Corporation
Rite Aid Corporation, through its subsidiaries, operates a chain of retail drugstores in the United States and...

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