Walgreens Boots Alliance, Inc. (“Walgreens”) is a global pharmacy, health and well-being company.

It operates over 13,000 stores in 11 countries, generating net sales of \($103.4\) billion. The company’s stated purpose is straightforward and direct—*to help people across the world lead healthier and happier lives.” Walgreen’s is one of the world’s largest purchasers of prescription drugs and other health products, and has more than 370,000 employees worldwide.

According to Walgreen’s 2015 annual report, the company values a portion of its inventory using the lower of last-in, first-out (LIFO) cost or market. It discloses the following in the footnotes to the financial statements:

To interpret, Walgreen’s inventory reserve as of year-end 2015 and 2014 was \($2.5\) billion and \($2.3\) billion, respectively, and therefore the change in the company’s inventory reserve was \($200\) million (\($2.5\) less \($2.3\) billion). The income statements and balance sheets for Walgreen’s follow:

Required
1. What would Walgreen’s earnings before income tax provision have been (in millions) at yearend 2015 if the company had only used FIFO to value its inventory?
2. What would Walgreen disclose on its balance sheet at year-end 2015 as the value of its inventory (in millions) if the company had used FIFO instead of LIFO?
3. Approximately how much did the Walgreen Company save in income taxes (in millions) in 2015 by using LIFO to value its inventory?

4. What was Walgreen’s inventory-on-hand period for 2015? 2014? (Inventory for 2014 was \($6,076\) million.)

5. Would Walgreen’s inventory-on-hand period change if the company had used FIFO to value its inventory instead of LIFO? Compute that value for 2015.

6. What was Walgreen’s days’ payable period for 2015? 2014? (Accounts payable for 2014 were

\($4,315\) million.)

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The Company values inventories on a lower of cost or market basis. Inventory includes product costs, inbound freight, direct labor, warehousing costs, overhead costs relating to the manufac- ture and distribution of products and vendor allowances not classified as a reduction of advertis- ing expense. The Company's Retail Pharmacy USA segment inventory is accounted for using the last-in-first-out ("LIFO") method. At August 31, 2015 and August 31, 2014, Retail Pharmacy USA segment inventories would have been greater by $2.5 billion and $2.3 billion, respectively, if they had been valued on a lower of first-in-first-out ("FIFO") cost or market basis.