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Essay / Research Paper Abstract
A 4 page paper discussing this public company’s approach to managing long-term debt: avoid it completely. Walgreen’s is more than 100 years old and currently is a $34 billion company opening an average of a store a day with plans to have 7,000 stores in operation by 2010. It leads its industry in market share for prescription drug sales, and seeks to continue that lead as the baby boomers continue to reach retirement age. The company carries no long-term debt at all, and in fact all of its significant debt is attributable to accounts payable. Though debt financing is preferred by many, Walgreen’s illustrates the power of having $8 billion in annual gross profit. Bibliography lists 4 sources.
Page Count:
4 pages (~225 words per page)
File: CC6_KSfinWalgDebt.rtf
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Unformatted sample text from the term paper:
traded company carries a range of long-term debt products as part of its capital structure, and the purpose here is to assess one of those instruments as it is used
at Walgreens. The problem with doing so is this: Walgreens carries no long-term debt... Current Position The $34 billion company is
the leader among the drug chains in the United States, opening stores at the breakneck speed of one each day (ORourke, 2004). While the company reports both on its
annual report for 2003 and its Form 8K (quarterly results) to the Security and Exchange Commission (SEC) that it does carry some non-current liabilities, virtually all of Walgreens liabilities are
in the form of accounts payable for current operations. Leading its industry has enabled the company to operate virtually on cash flow from operations while also building an impressive
cash reserve. Walgreens current ratio is 1.786; the fact that it carries no long-term debt and has no debt service to deduct from
current cash flow leaves it in the enviable position of realizing $8.08 billion in profit for 2003 (WAG, 2004) on sales of $33.74 billion in 2003. The result of
having such impressive amounts of cash to use at its discretion is that it is building its store-a-day on revenues of current operations in the form of cash reserves.
Amazingly, investors have not picked up on the fact that the industry leader has no debt and is positioned to profit immensely from the continuing "graying of America." With
a 13 percent total market share in the sale of prescription drugs, Walgreens leads the country in market share prescription drug sales. Walgreens
...