EVA Calculation and comparison Essay Example | Topics and Well Written Essays - 750 words

EVA Calculation and comparison - Essay Example The chart below indicates that Walgreens EVA scores have been on the rise in the past three years. CVS' EVA scores have been falling and indicate that CVS needs to examine its resource utilization methods and decide what to do turn its scores around. The goal of any organization is to lower its costs while increasing profitability. There are many methods organizations can use. In the three year window examined (2004, 2005, 2006). Initially Walgreens' total assets were slightly higher than CVS'. Then CVSs were reported as slightly higher than Walgreens. Walgreens consistently outspends CVS for cost of goods sold. The higher the cost of goods sold the lower the profits. But, Walgreens consistently reports 10% on ROA (return on assets). CVS reports between 6.3% and 8% ROA. Walgreens has a bigger share of the market and consistently outperforms CVS. But, the difference is not so big that n any one year CVS could come out on top. The current earnings are so close that a good year could put CVS ahead. Both pharmacies could benefit from strategies to differentiate them in the market and draw in a greater share of the market in pharmacy sales. Walgreens has begun doing so by advertising itself as "your pharmacy" and "there's my pharmacy next to work""there's my pharmacy close to home"(TV commercials). .. Sales $37,006,200 Cash $513,400 N/P $774,200 COGS $27,105,000 A/R $2,080,700 A/P $3,988,900 Gross $9,901,200 Inventory $5,719,800 Accrd Exp $59,500 Prepaids $78,800 SG&A $7,881,700 TTL Cur $8,392,700 TTL Cur $4,822,600 EBIT $2,019,500 PP&E $3,952,600 LTD $1,594,100 Interest $110,500 GoodWill $1,789,900 TTL Liabilities $6,416,700 EBT $1,909,000 intangible $802,200 Other Assets $223,500 Equity $535,500 33.96% Tax $648,300 LTA Charges $122,500 EAT $1,260,700 TTL Assets $15,283,400 TTL Liab & Equity $6,952,200 ROA 8.20% ROE 235.40% Debt $2,368,300 0.8200 0.01 0.82% equity $535,500 0.1800 1.4894 26.81% $2,903,800 27.63% 18.25% EVA -10.05% Table 2 Table 3 31-Dec-03 Assets Liabilities & Equity Sales $26,588,000 Cash $843,200 N/P $3,166,000 COGS $26,588,000 A/R $1,601,700 A/P 0 Gross $26,588,000 Inventory $4,016,500 Accrd Exp $323,200 Prepaids $35,100 SG&A $5,439,400 TTL Cur $6,496,500 TTL Cur $3,489,200 EBIT $1,423,600 PP&E $2,542,100 LTD $1,032,100 Interest $48,100 GoodWill $889,000 TTL Liabilities $4,521,300 EBT $1,375,500 Intangible $403,700 Other Assets $211,800 Equity $207,800 38.40% Tax $528,200 LTA Charges 0 EAT $847,300 TTL Assets $10,543,100 TTL Liab & Equity $4,729,100 ROA 8.00% ROE 407.70% Debt $4,198,100 0.9500 0.010639 1.01% equity $207,800 0.0500 0.3538 1.77% $4,405,900 2.78% 1.71% EVA 6.29% Works Cited: Ecoach. EVA. Retrieved 2007-02-09