Question: Rite Aid Corporation operates retail drugstores in the United States

Rite Aid Corporation operates retail drugstores in the United States. It is one of the country's largest retail drugstore chains with 3,333 stores in operation as of March 3, Year 3. The company's drugstores' primary business is pharmacy services. The company also sells a full selection of health and beauty aids and personal care products, seasonal merchandise, and a large private brand product line.
The following condensed information was extracted from Rite Aid's Form 10-K for the fiscal year that ended March 3, Year 3 (all dollars in thousands).

1. Calculate cash collected from customers during fiscal Year 3.
2. Had Rite Aid not securitized receivables during Year 3, Year 2, and Year 1, what would its operating cash flows have been in each of these years? Do you believe that Rite Aid’s operating cash flows were materially affected by its receivables securitization practices?
3. Calculate pre-tax operating income for Year 3, Year 2, and Year 1, and compare it to operating cash flows as originally reported and to operating cash flows assuming that Rite Aid did not securitize receivables. Compare both results and comment on the impact of Rite Aid’s practice of securitizingreceivables
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  • CreatedSeptember 10, 2014
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