Which current assets are the most significant? Explain your answer.
The current asset that is of more significance to Walgreen Co. is the inventory which is valued at $8,309 million. The inventories are assessed through lower of last in, first-out method which is known as LIFO cost or market basis (Walgreen Co., 2019) . By the end of 31 August 2014, the inventories would have risen to great heights if they had considered valuing them on a basis of market basis or lower of first-in, first-out (FIFO) cost. The LIFO liquidation state being experienced at Walgreen Company is due to the deteriorating levels of inventory. Had Walgreen used the FIFO cost basis method then they would have increased their inventory level to the maximum. Companies are given the power of selecting the accounting method that is suitable for them by the GAAP. They are given the option of either LIFO or FIFO. Therefore, the only requirement needed for the companies is to indicate the method they are using in their financial report (Schoenebeck, & Holtzman, 2010) . Inventory includes warehousing costs, inbound freight product costs as well as vendor stipends that are not categorized under the advertisement cost.
Evaluate the creditworthiness of Walgreen based on the balance sheet.
The current balance sheet indicates that Walgreen worthy of credit since it is capable of paying even when they are due. The balance sheet indicates that the debt ratio for Walgreen is less than 50% which is a clear indication that not much is from debts. This is clear proof that if granted a debt then the company will pay at the agreed time. Another fact qualifies Walgreen to be creditworthiness is the current increase in assets and liabilities (Ormiston, & Fraser, 2013). A debt ratio of less than 50% is considered to be solvent and health, and it is a clear indication that the company can pay back long-term debts without any issues as payments come due. Therefore all this prove that Walgreen is healthy to acquire loans longs as it maintains its healthy state.
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References
Walgreen Co. (2019). Form 10-K. Washington, D.C.: United States Securities and Exchange Commission.
Schoenebeck, K. P., & Holtzman, M. P. (2010). Balance Sheet. In Interpreting and analyzing financial statements: A project-based approach (pp. 38-39). Boston [u.a. Prentice Hall.
Ormiston, A., & Fraser, L.M. (2013). The Balance Sheet. In understanding financial statements (10 th ed., pp. 56-59). New York, NY: Pearson Education.
