Refer to the CVs annual report in the Supplement to
Refer to the CVs annual report in the Supplement to Chapter 16 and to the following data (in millions) for Walgreens in 2011: net sales, $72,184; cost of sales, $51,692; total operating expenses, $16,561; and inventories, $8,044. Determine which company—VS or Walgreens—had more profitable merchandising operations in 2011 by preparing a schedule that compares the companies based on net sales, cost of sales, gross margin, total operating expenses, and income from operations as a percentage of sales.
In addition, for each company, compute inventories as a percentage of the cost of sales. Which company has the highest prices in relation to costs of sales? Which company is more efficient in its operating expenses? Which company manages its inventories better? Overall, on the basis of the income statement, which company is more profitable? Explain your answers.

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