Case 2.3 Walgreen Co. and Subsidiaries 88 CHAPTER 2 The Balance Sheet The follow

Question

Case 2.3 Walgreen Co. and Subsidiaries 88 CHAPTER 2 The Balance Sheet The following excerpts are from the 2013 Walgreen Co. Form 10-K CONSOLIDATED BALANCE SHEETS Walgreen Co. and Subsidiaries at August 31, 2013 and 2012 it shares and per share amounts) 2013 2012 Assets Current Assets Cash and cash equivalents Accounts receivable, net Inventories Other current assets s 2,106 $ 1,297 2,632 2,167 6,852 70 284 11,874 10760 Total Current Assets Noncurrent Assets Property and equipment, at cost, less accumulated depreciation and amortization Equity investment in Alliance Boots Alliance Boots call option Goodwill Other noncurrent assets 12,138 12,03 2,410 2,161 6,261 6,140 839 866 1,959 1,497 23,607 22,70 Total Noncurrent Assets Total Assets $ 35481 $3342 Liabilities and Shareholders' Equity Current Liabilities Short-term borrowings Trade accounts payable Accrued expenses and other liabilities Income taxes $570 $1,319 4,635 4384 3,577 3019 Total Current Liabilities NonCurrent Liabilities 8,883 87 Long-term debt Deferred income taxes Other noncurrent liabilities Total Noncurrent Liabilities Commitments and Contingencies (see Note) 4,477 4.073 600 5 2,067 18 7,144 65 Shareholders'Equity Preferred stock, $.0625 par value; authorized 32 million shares; none issued ne 1410180150 par valae, authorized 3.2 billion shares Paid-in capital 1,074

Explanation / Answer

g) Yes since walgreens has operating leases which is treated as a form of off balance Sheet financing .

h)Walgreen as it stands has a poor credit risk due to the high risk being involved with off balance sheet financing.The firm must be able to make lease payments under the operating lease which is a contractual obligation thus this will put walgreens at a poor credit risk.

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