Walgreens Boots Alliance Inc. (NASDAQ:WBA)

Inventories

The inventory levels showed a general upward trend over the analyzed period from 2014 to 2019. Starting at 6,076 million US dollars in 2014, inventories increased significantly to 8,678 million in 2015, which represents a notable rise. From 2015 to 2016, there was a smaller increase to 8,956 million, followed by a slight decrease to 8,899 million in 2017. In 2018, inventories rose again to 9,565 million, reaching the highest point in the period. However, in 2019, there was a slight reduction to 9,333 million. Overall, the inventory figures suggest an expansion in stock levels, with some fluctuations, likely reflecting changes in operational scale or inventory management strategies.

The financial data over the six-year period reveals several important trends across reported and LIFO reserve adjusted figures.

Inventories

The reported inventory values increased from 6,076 million USD in 2014 to a peak of 9,565 million USD in 2018, with a slight decline to 9,333 million USD in 2019. The adjusted inventories, accounting for LIFO reserve, follow a similar upward trajectory but at consistently higher levels, rising from 8,376 million USD in 2014 to 12,565 million USD in 2018, then slightly decreasing to 12,533 million USD in 2019. This indicates the significance of LIFO accounting on inventory valuations, with adjustments increasing inventory carrying amounts by approximately 30-40% over the period.

Current Assets

Reported current assets showed substantial growth from 12,242 million USD in 2014 to 25,883 million USD in 2016, followed by a marked decline to 17,846 million USD in 2018 and a moderate recovery to 18,700 million USD in 2019. Adjusted current assets demonstrate a parallel trend, with values growing from 14,542 million USD in 2014 to 28,683 million USD in 2016 and then contracting to 20,846 million USD in 2018 before recovering to 21,900 million USD in 2019. The adjustment maintains a consistent premium over reported values, reflecting the impact of inventory valuation on current asset measures.

Total Assets

A similar pattern emerges for total assets, with reported values nearly doubling from 37,182 million USD in 2014 to 68,782 million USD in 2015 and peaking at 72,688 million USD in 2016, before declining to 67,598 million USD by 2019. Adjusted total assets consistently exceed reported figures by approximately 2,000 million USD, ranging from 39,482 million USD in 2014 to 71,124 million USD in 2018. This indicates the adjustment's stable contribution to asset valuation throughout the period.

Shareholders’ Equity

Reported shareholders’ equity increased significantly from 20,457 million USD in 2014 to 30,861 million USD in 2015 but then trended downward annually, reaching 23,512 million USD in 2019. Adjusted equity follows the same trajectory but remains higher by around 2,000 million USD in each period, starting at 22,757 million USD in 2014 and declining to 26,712 million USD in 2019. This decrease over time suggests potential downward pressures on equity despite initial growth.

Net Earnings

Reported net earnings displayed volatility, rising from 1,932 million USD in 2014 to 4,220 million USD in 2015, remaining relatively stable through 2017, peaking at 5,024 million USD in 2018, then decreasing sharply to 3,982 million USD in 2019. The adjusted net earnings similarly increased from 2,132 million USD in 2014 to 5,024 million USD in 2018 and declined to 4,182 million USD in 2019, maintaining a modest premium over reported earnings. The overall earnings trend reflects periods of strong performance followed by a notable decline in the most recent year.

Overall, the data indicates that inventory and asset valuations adjusted for LIFO reserve remain consistently higher than reported figures, highlighting the material effect of inventory accounting methods. Assets and equity experienced rapid growth initially but have generally declined since around 2016. Adjusted earnings and equity reflect a similar pattern, suggesting challenges in sustaining growth over the later years. The fluctuations in current assets and net earnings also point to operational or market dynamics impacting liquidity and profitability during the period assessed.

The analysis of the financial data over the six-year period reveals multiple trends in liquidity, profitability, efficiency, leverage, and returns, both in reported and inventory LIFO reserve adjusted terms.

Liquidity (Current Ratio)

Both the reported and adjusted current ratios show a declining trend across the years. From 2014 to 2019, the reported current ratio fell from 1.38 to 0.73, while the adjusted ratio decreased from 1.63 to 0.85. Although the adjusted ratios consistently remain higher than the reported ones, liquidity has weakened over this period, suggesting diminished short-term financial strength.

Profitability (Net Profit Margin)

The net profit margins, both reported and adjusted, exhibit fluctuations but a general slight decline by the end of the period. The reported margin increased from 2.53% in 2014 to a peak of 4.08% in 2015, then gradually declined to 2.91% in 2019. Similarly, the adjusted margin reached a high of 4.27% in 2015 and decreased to 3.06% by 2019. The adjusted margins are marginally higher than the reported ones, indicating moderate improvement when accounting for inventory adjustments.

Efficiency (Total Asset Turnover)

Both reported and adjusted total asset turnover ratios started lower in 2015 compared to 2014 but showed a gradual recovery and improvement by 2019. The reported ratio increased from 1.5 in 2015 to 2.02 in 2019, nearing the initial 2014 value of 2.05. The adjusted ratio followed a similar pattern, rising from 1.45 to 1.93 across the same interval. This suggests enhanced utilization of assets over time despite an initial decline.

Leverage (Financial Leverage Ratio)

There is a consistent upward trend in both reported and adjusted financial leverage ratios, indicating increasing use of debt or financial obligations. The reported ratio rose steadily from 1.82 in 2014 to 2.88 in 2019. The adjusted leverage figures are slightly lower but similarly increased from 1.73 to 2.65 during this period. This growing leverage implies greater financial risk exposure over time.

Return on Equity (ROE)

ROE improved from 2014 through 2018 before decreasing in 2019. The reported ROE rose from 9.44% in 2014 to a peak of 19.32% in 2018, then declined to 16.94% in 2019. The adjusted ROE shows a comparable trend, increasing from 9.37% to 17.32% before falling to 15.66%. The gap between reported and adjusted ROE remains narrow, signifying consistent profitability trends when accounting for inventory adjustments.

Return on Assets (ROA)

ROA maintains a fluctuating but generally positive trend between 2014 and 2019. The reported ROA increased from 5.2% to a high of 7.37% in 2018 but fell to 5.89% in 2019. Adjusted ROA followed a similar pattern, rising from 5.4% to 7.06% before declining slightly to 5.91%. This indicates effective asset use for generating income, albeit with recent moderation.

Overall, the data reflects a company experiencing declines in liquidity with increasing financial leverage, suggesting rising financial risk over time. Profitability and efficiency metrics improve or stabilize mid-period but show some weakening toward the end of the timeframe. Adjustments for inventory LIFO reserve tend to moderately enhance ratios related to liquidity and profitability without substantially altering trend directions, indicating that inventory accounting methods have a measurable but not transformative impact on financial assessments.

Current Assets (Reported)

Reported current assets increased notably from 12,242 million USD in 2014 to a peak of 25,883 million USD in 2016. Following this peak, there was a decline in reported current assets to 17,846 million USD by 2018, with a slight recovery to 18,700 million USD in 2019.

Current Assets (Adjusted)

Inventory LIFO reserve adjusted current assets show a similar trend, starting at 14,542 million USD in 2014 and rising to 28,683 million USD in 2016. Post-2016, adjusted current assets decreased to 20,846 million USD in 2018, followed by a modest increase to 21,900 million USD in 2019. The adjustment consistently reports higher asset values compared to the reported figures, reflecting the inventory valuation impact.

Current Ratio (Reported)

The reported current ratio exhibits a declining trend over the period examined. It started at 1.38 in 2014, decreased moderately to 1.19 in 2015, then increased to 1.52 in 2016. After 2016, the ratio declined sharply to 0.82 in 2018 and further to 0.73 in 2019, indicating a weakening short-term liquidity position in the latter years.

Current Ratio (Adjusted)

The adjusted current ratio, which accounts for the LIFO reserve effect, mirrors the trend observed in the reported ratio but at consistently higher levels. The ratio began at 1.63 in 2014, increased to 1.69 in 2016, then declined to 0.96 in 2018 and further to 0.85 in 2019. This indicates that liquidity is better when accounting for inventory adjustments, though still showing deterioration over time.

Overall Analysis

The data shows that both reported and adjusted current assets peaked in 2016 before declining over the next few years, suggesting potential changes in working capital or operational adjustments. Correspondingly, the current ratios reveal a drop in liquidity after 2016, more pronounced in reported figures but also evident in adjusted ones. The consistent premium shown by the adjusted figures over the reported ones underlines the material impact of inventory valuation on asset and liquidity measures.

The analysis reveals fluctuating trends in both reported and adjusted net earnings as well as the corresponding net profit margins over the six-year period.

Reported Net Earnings

The reported net earnings demonstrate an overall upward trend initially, increasing significantly from 1,932 million USD in 2014 to a peak of 5,024 million USD in 2018. However, in 2019, there is a notable decline to 3,982 million USD, which represents approximately a 20.7% decrease from the previous year.

Adjusted Net Earnings

Adjusted net earnings follow a similar trajectory, starting at 2,132 million USD in 2014, increasing steadily to peak at 5,024 million USD in 2018. Unlike reported net earnings, the adjusted figure in 2019 decreases less sharply, falling to 4,182 million USD, suggesting adjustments mitigate some volatility seen in the reported numbers.

Reported Net Profit Margin

The reported net profit margin shows an initial increase from 2.53% in 2014 to a high of 4.08% in 2015, followed by a gradual decline over the next three years, falling to 3.45% in 2017. It then partially recovers to 3.82% in 2018 before dropping more sharply to 2.91% in 2019, indicating some pressure on profitability in the latest period.

Adjusted Net Profit Margin

Adjusted net profit margin trends mirror those of reported margin but generally maintain higher values, starting at 2.79% in 2014 and reaching 4.27% in 2015. It then decreases gradually to 3.62% in 2017, stabilizes at 3.82% in 2018, and experiences a decline to 3.06% in 2019. This pattern suggests that adjustments have a moderating effect on the fluctuations observed in reported profitability.

Overall, the data indicates growth in earnings and profitability from 2014 through 2018, followed by a downturn in 2019. The adjusted figures consistently present a more stable and slightly more favorable profitability profile, highlighting the impact of accounting adjustments on reported financial performance. The decline in 2019 warrants further investigation to identify underlying factors affecting the company’s earnings and margins during this period.

The analysis of the annual financial data reveals several notable trends in the reported and inventory LIFO reserve adjusted figures over the six-year period.

Total Assets

Reported total assets more than doubled from US$ 37,182 million in 2014 to US$ 68,598 million in 2019, showing substantial asset growth overall. There was a significant jump between 2014 and 2015, followed by comparatively smaller fluctuations. The adjusted total assets, accounting for the inventory LIFO reserve, show a similar increasing trend, rising from US$ 39,482 million in 2014 to US$ 70,798 million in 2019. This adjustment consistently adds approximately US$ 2,000 million to US$ 2,600 million compared to the reported total assets, reflecting the inventory valuation impact.

Total Asset Turnover

The reported total asset turnover ratio initially decreased sharply from 2.05 in 2014 to 1.50 in 2015, indicating a reduced efficiency in asset utilization. However, from 2015 onward, the ratio exhibits a recovery trend, steadily improving each year to reach 2.02 by 2019, nearly returning to the 2014 level. The adjusted total asset turnover ratio follows a comparable pattern, beginning at 1.93 in 2014, dropping to 1.45 in 2015, and then progressively climbing back to 1.93 by 2019. The relatively lower turnover ratios in the adjusted figures suggest that the inventory adjustment slightly dampens the efficiency metrics but maintains similar overall trends.

Overall, the data reflects growth in asset base accompanied by an initial decline in asset turnover efficiency, followed by a gradual enhancement in the company’s ability to generate sales from its asset investments. The LIFO adjustment consistently increases the asset base and decreases turnover ratios, demonstrating the impact of inventory valuation on financial metrics.

The analysis of the financial data reveals several notable trends in both reported and inventory LIFO reserve adjusted figures over the six-year period ending in 2019.

Total Assets

Reported total assets show a significant increase from 37,182 million US dollars in 2014 to a peak of 72,688 million in 2016, followed by a moderate decline and stabilization around 67,500 million in 2019. The adjusted total assets follow a similar pattern but maintain consistently higher values due to the inventory LIFO reserve adjustment, peaking at 75,488 million in 2016 and stabilizing near 70,798 million in 2019. This indicates that the inventory adjustment consistently adds value to the asset base over the periods examined.

Shareholders’ Equity

Reported shareholders’ equity increases sharply from 20,457 million in 2014 to 30,861 million in 2015, then gradually declines to 23,512 million by 2019. The adjusted shareholders’ equity, which factors the inventory LIFO reserve, is consistently higher than the reported figures and follows a parallel trend, rising from 22,757 million in 2014 to 33,361 million in 2015 before steadily decreasing to 26,712 million in 2019. The decline in equity after 2015 suggests pressures on retained earnings or other comprehensive income despite the initial growth.

Financial Leverage

The reported financial leverage ratio increases steadily over the period, from 1.82 in 2014 to 2.88 in 2019, indicating a rising reliance on debt financing relative to equity. The adjusted financial leverage ratio, accounting for the LIFO reserve, mirrors this upward trend but remains slightly lower each year, increasing from 1.73 to 2.65. This trend evidences an increasing leverage position but adjusted figures suggest somewhat less aggressive financial gearing when inventory valuation adjustments are considered.

Overall, the data depicts a company expanding its asset base notably in the early years followed by a period of stabilization or slight decline. Simultaneously, shareholders’ equity experiences growth early on with a subsequent downward trend, while financial leverage consistently rises, signaling increased use of debt relative to equity. The inventory LIFO reserve adjustment consistently highlights a more favorable asset and equity position and slightly reduced financial leverage, underscoring the importance of inventory valuation methods on the company's financial metrics.

The financial data reveals several notable trends and changes over the six-year period. Net earnings demonstrate fluctuations with a generally positive outlook but no consistent upward trajectory. Reported net earnings initially increased significantly from 1,932 million USD in 2014 to 4,220 million USD in 2015, then exhibited minor declines and recoveries, peaking again at 5,024 million USD in 2018 before falling to 3,982 million USD in 2019. Adjusted net earnings follow a similar pattern, starting higher than reported figures in 2014 and generally outpacing reported net earnings throughout the years.

Shareholders’ equity, both reported and adjusted, displays a declining trend from 2015 onwards. The reported total shareholders’ equity peaked in 2015 at 30,861 million USD before decreasing steadily to 23,512 million USD by 2019. Adjusted shareholders' equity shows the same downward pattern but remains consistently higher than the reported figures, reflecting adjustments likely related to inventory LIFO reserve or other accounting considerations.

Return on equity (ROE) metrics provide insight into the company’s profitability relative to its equity base. Reported ROE improved from 9.44% in 2014 to a peak of 19.32% in 2018, followed by a decline to 16.94% in 2019. Adjusted ROE follows a comparable pattern but with slightly lower percentages, peaking at 17.32% in 2018 and decreasing to 15.66% in 2019.

Net Earnings

Overall positive results with fluctuations; adjusted earnings consistently higher than reported, indicating the impact of inventory adjustments or other non-cash items.

Shareholders’ Equity

Declining trend over the years, despite adjustments; suggests possible share repurchases, dividend payouts, or other equity-reducing activities.

Return on Equity

Improvement in profitability relative to equity until 2018, somewhat reversing in 2019; adjusted ROE slightly lower but following the same directional trends as reported ROE.

These trends collectively indicate a company experiencing varied earnings performance, reducing equity base, and improving but volatile profitability measures over the period under review. The adjustments applied provide a more favorable view of earnings and equity but do not change the overarching directional tendencies observed.

The analysis of the financial data over the six-year period reveals several notable trends in earnings, asset base, and profitability ratios.

Net Earnings

Reported net earnings exhibited variability, starting at $1,932 million in 2014 and rising significantly to a peak of $5,024 million in 2018 before declining to $3,982 million in 2019. The adjusted net earnings followed a similar pattern but consistently showed slightly higher values than reported net earnings each year, indicating positive adjustments related to inventory LIFO reserve or other accounting considerations. The peak in adjusted earnings also occurred in 2018 at $5,024 million, followed by a decline to $4,182 million in 2019.

Total Assets

Reported total assets nearly doubled from $37,182 million in 2014 to $68,782 million in 2015, suggesting a significant event such as acquisition or revaluation impacting asset size. From 2015 to 2019, total assets fluctuated somewhat, peaking at $68,124 million in 2018 before slightly declining to $67,598 million in 2019. Adjusted total assets followed the same pattern but consistently reported higher values, ranging from $39,482 million in 2014 to $70,798 million in 2019, reflecting adjustments to asset valuations likely due to inventory accounting.

Return on Assets (ROA)

Reported ROA presented upward movement from 5.2% in 2014 to a high of 7.37% in 2018, indicating improving efficiency in generating earnings from its asset base over the years. However, it decreased to 5.89% in 2019. Adjusted ROA showed a similar trend but was slightly higher each year, starting at 5.4% in 2014, peaking at 7.06% in 2018, and falling modestly to 5.91% in 2019, reinforcing the positive impact of adjustments on profitability measures.

Overall, the data suggests a period of growth and increased efficiency up to 2018, followed by a reversal or normalization in 2019. The consistent premium of adjusted figures over reported figures highlights the importance of inventory LIFO reserve adjustments in accurately assessing the company’s financial performance and position.