[SOLVED] The following excerpts are from the 2013

The following excerpts are from the 2013 Walgreen Co. Form 10-K:

The accompanying Notes to Consolidated Financial Statements are integral parts of these statements. Notes to Consolidated Financial Statements 1. Summary of Major Accounting Policies Description of Business The Company is principally in the retail drugstore business and its operations are within one reportable segment. At August 31, 2013 there were 8,582 drugstore and other locations in 50 states, the District of Columbia, Guam, and Puerto rico. Prescription sales were 62.9% of total sales for fiscal 2013 compared to 63.2% in 2012 and 64.7% in 2011. Allowance for Doubtful Accounts The provision for bad debt is based on both historical write-off percentages and specifically identified receivables. Activity in the allowance for doubtful accounts was as follows (In millions):

Inventories Inventories are valued on a lower of last-in, first-out (LIFO) cost or market basis. At August 31, 2013 and 2012, inventories would have been greater by $2.1 billion and $1.9 billion, respectively, if they had been valued on a lower of first-in, first-out (FIFO) cost or market basis. As a result of declining inventory levels, the fiscal 2013 and 2012 LIFO provisions were reduced by $194 million and $268 million of LIFO liquidation, respectively. Inventory includes product costs, inbound freight, warehousing costs, and vendor allowances not classified as a reduction of advertising expense. 3. Leases the Company owns 20.2% of its operating locations; the remaining locations are leased premises. Initial terms are typically 20 to 25 years, followed by additional terms containing renewal options at five-year intervals, and may include rent escalation clauses. the commencement date of all lease terms is the earlier of the date the Company becomes legally obligated to make rent payments or the date the Company has the right to control the property. the Company recognizes rent expense on a straight-line basis over the term of the lease. In addition to minimum fixed rentals, some leases provide for contingent rentals based upon a portion of sales. Minimum rental commitments at August 31, 2013, under all leases having an initial or remaining non-cancelable term of more than one year are shown below (In millions):

The capital lease amount includes $155 million of imputed interest and executory costs. total minimum lease payments have not been reduced by minimum sublease rentals of approximately $140 million on leases due in the future under non-cancelable subleases. The Company remains secondarily liable on 26 assigned leases. the maximum potential undiscounted future payments are $18 million at August 31, 2013. Lease option dates vary, with some extending to 2041.

Required: (a) Using the Consolidated Balance Sheets for Walgreen Co. for August 31, 2013 and 2012, prepare a common-size Balance Sheet. (b) Which current asset is the most significant? Which noncurrent asset is the most significant? Are the relative proportions of current and noncurrent assets what you would expect for a drug store? (c) Analyze accounts receivable and allowance for doubtful accounts. (d) What inventory method is used to value inventories? has Walgreen experienced inflation or deflation? Explain your answer. Explain the reference in the inventory note to the LIFO liquidation and what this means with regard to net income reported. (e) Assess the level of debt and risk that Walgreen has by looking only at the balance sheet. (f) Estimate the dollar amount of dividends Walgreen paid in 2013. (g) Does Walgreen use offâ€“balance sheet financing? Explain your answer. (h) Evaluate the creditworthiness of Walgreen based on the balance sheet and the excerpts from the notes.

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CONSOLIDATED BALANCE SHEETS Walgreen Co. and Subsidiaries at August 31, 2013 and 2012 Yin millions, except shares and per share amounts) 2013 2012 Assets Current Assets Cash and cash equivakents Accounts neceivable, net $ 2,106 $ 1,297 2,167 7,086 2,632 Inventories Other current assets Total Curront Assets 6,852 284 260 11,874 10,760 Noncurrent Assets Property and oquipment, at cost, less accumulatod doprociation and amortization 12,138 12,038 Equity investment in Alliance Boots Alliance Boots call option 2,410 2,161 6,261 6,140 Соodwill 839 866 Other noncurrent assets 1,959 23,617 $35481 1,497 Total Noncurrent Assets 22,702 $33462 Total Assets Liabilities and Shareholders' Equity Current Liabilites $ 570 $1,319 Short-term borrowings Trade accounts payable Accrued exponsos and other liabilities 4,635 4,384 3,577 3,019 Income taxes 101 Total Current Liabilities 8,883 8,722 NonCurrent Liabilites Long-term debt Deferred income taxes 4,477 4,073 600 545 Other noncurrent liabilities 2,067 1,886 Total Noncurrent Liabilities 7,144 6,50M Commitments and Contingencies (see Note) Shareholders' Equity Preferred stock, S.0625 par value; authortzed 32 million shares; noñe issued Common stock, S.078125 par valte; authorized 3.2 billion shares; issued 1,028,180,150 shares in 2013 and 2012 Paid-in captal 80 80 1,074 936 Employee stock loan receivable Retained earningN Accumulated other comprehensive (loss) tncome Treasury stock at cost, 81,584,572 shares in 2013 and 84,124,816 shares in 2012 Total Shareholders' Equity Total Liabilitios and Sharoholders' Equity (11) (19) 21,523 20,156 68 (98) (3,114) (2,985) 19,454 $35,481 $33A62 18,236 2013 2012 2011 Balance at beginning of year $ 9 $ 101 $ 104 Bad debt provision 124 107 88 Write-offs (69) $ 154 (109) $ 99 (91) $ 101 Balance at end of year Capital Lease Operating Lease 2014 $ 19 $ 2,536 2015 19 2,514 2016 18 2,464 2017 17 2,389 2,292 23,507 $ 35,702 2018 15 Later 270 Total minimum lease payments $ 358 WALGREEN CO. INFORMATION FROM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Years Ended August 31, 2013 and 2012 (in millions) 2013 2012 $ 72,217 $ 2,450 $ 71,633 $ 2,127 Sales Net income Extracted from 10-K filings for Walgreen Co. 2013. Obtained from U.S. Securities and Exchange Commission. www.sec.gov.

Question: The following excerpts are from the 2013

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