Preview

Rite Aid

Powerful Essays
Open Document
Open Document
528 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Rite Aid
Rite Aid

1) a. The secure debt of Rite Aid is tied to specific assets. Unsecured debt is money that Rite Aid borrowed from financial institutions and has no collateral tied to it. Rite Aid distinguish between these two types of debt to give a clear pictures to investors, credit rating agencies, and lenders that they will be able to make interest and principal payments on time.

b. A guarantee debt is an assurance if one party defaults; another party will pay the debt. Rite Aid wholly-owned subsidiaries guarantee the debt.

2) Per note 11, Indebtedness and Credit Agreement:
Total Debt
6,370,899 ~BS
Due within the coming FY
(51,502)

Per Balance Sheet:
Current Maturities of LTD
51,502
LTD, less current maturities
6,185,633
Lease Financing Obligation, less current maturities
133,764
Total
6,370,899 ~Note 11

3) a. Rite Aid did not have to pay the face value to repurchase these notes in the open market, because the note maturity is June 2017, therefore is not fully amortized to the note face value yet.

b. The market rate of interest is higher than the coupon rate and the effective rate of interest. At the open market, the repurchased of these notes resulted in a gain which means that the current market rate exceeds the effective rate of interest at time of issue.

4) Firms use convertible notes to raise money, to offer the bond at a lower coupon rate, to have more of the operating income available for the common stockholder, and to attract investors that may not otherwise be interested. An investor would buy these types of bonds because it gives you the option to convert to stocks. If converted, the firm would reduce a liability and increase equity on the balance sheet for the amount converted.

5) a.

Ratio
Definition
Industry Avg
Rite Aid 2010
Rite Aid 2009
Common-size debt
Total Liabilities/Total Assets
48.83%
(9,723,462/8,049,911)=
120.79%
(9,526,192/8,326,540)=
114.41%
Common-size interest expense

You May Also Find These Documents Helpful

  • Good Essays

    Bonds are a form of interest-bearing notes payable and companies issues bonds to obtain large amounts of long-term capital. Another reason that companies issues bond are that bonds have three advantages over common stock. The advantages are stockholder control is not affected, tax savings results, and the earnings per share may be higher.…

    • 875 Words
    • 4 Pages
    Good Essays
  • Good Essays

    This work requires that you consider the fair value of the note on the seller 's books (note receivable). Portion of the codification are cut and pasted into the document for you.…

    • 1285 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    XACC/291 – Week 4 Assignment Complete Exercises E10-6, E10-8, & E10-18. And Problems 10-3A & 10-6A. E10-6 Payroll Tax Expense $352.16 FICA Taxes Payable 198.40 Federal Unemployment Taxes Payable 19.84 State Unemployment Taxes Payable 133.92 (…

    • 338 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Business Discussion 10

    • 869 Words
    • 3 Pages

    A formal debt instrument issued by a corporation or government entity and is anywhere from 10 years to thirty years long. A convertible bond is a bond or share of preferred stock that gives its holder the right to exchange it for a stated number of shares of common stock. Investors like convertible bonds because it allows them to gain from an increase in the price of common stock, while limiting their risk if the price of the stock falls. The firm can also benefit from issuing convertible bonds because the popularity of this feature with investors allows it to offer a lower coupon rate on convertible bonds, thus reducing its fixed payments. The important group that can be harmed by convertible bonds is the corporation’s existing stockholders.…

    • 869 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Rite Aid

    • 278 Words
    • 1 Page

    Senior debt, frequently issued in the form of senior notes or referred to as senior loans, is debt that takes priority over other unsecured or otherwise more "junior" debt owed by the issuer. Senior debt has greater seniority in the issuer’s capital structure than subordinated debt. In the event the issuer goes bankrupt, senior debt theoretically must be repaid before other creditors receive any payment.…

    • 278 Words
    • 1 Page
    Good Essays
  • Good Essays

    Scott Equipment Paper

    • 723 Words
    • 3 Pages

    In today’s business sector, organizations use debt financing to accomplish their monetary goals. This can be defined as raising working resources by borrowing. The Scott Equipment Organization is researching a variety of combinations of instant and continuing debt financing in financing all of their assets. When referencing short-term financing the company is looking to mature in one year or less, as for long-term they consider this to be more than a year. Short-term debt is primarily used to amplify the total of accessible operational capital with the intention of assisting the corporation with its daily operations. Such things like purchasing equipment or compensate suppliers for services rendered. Long-term debt in most cases involves an elevated interest rate than that of short-term debt. This is because the primary lender is taking an enormous risk by loaning currency for a longer point of time.…

    • 723 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Walmart

    • 6499 Words
    • 26 Pages

    The first Wal-Mart store was opened in Rogers Arkansas in the Year 1962. From Wal-Mart’s company website a common misconception people have in regards to discount retailing is put to rest. That being this was the year it all started, When Kmart, Target, and Wal-Mart first opened. In actuality however, the chain of variety stores Sam Walton owned during the 1950’s faced stiff competition for many regional discount stores. In 1972, Wal-Mart stock was offered for the first time on the New York Stock Exchange. With this infusion of capital, the company grew to 276 stores in 11 states by the end of the decade. Also from the company’s official website, it is important to note that in 1983 the first Sam’s Club members-warehouse store opened. The first Supercenter opened in 1988, featuring a complete grocery, and 36 departments of general merchandise. By 1989, there were 1,402 Wal-Mart stores and 123 Sam’s Club locations. Employment had increased tenfold. Sales had grown from $1 billion in 1980, to $26 billion. Wal-Mart’s company website states that Today, 7,262 stores and club locations in 14 markets employ more than 1.9 million associates,…

    • 6499 Words
    • 26 Pages
    Powerful Essays
  • Good Essays

    A Modest Proposal Vocab

    • 1488 Words
    • 6 Pages

    collateral - a security pledged for the repayment of a loan additional but subordinate accompaniment to something else…

    • 1488 Words
    • 6 Pages
    Good Essays
  • Good Essays

    What is Credit?

    • 442 Words
    • 2 Pages

    can be of two types: debt services default and technical default. Debt service default occurs when the borrower has not made a scheduled payment of interest or principal…

    • 442 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Rite Aid

    • 738 Words
    • 3 Pages

    Rite Aid has more than 4,900 stores in over thirty one states, but it all started with just one. September 1962, Thrif D Discount Center in Scranton, Pennsylvania opened. What started as a store front, expanded expeditiously. By 1965, Thrif D Discount Center had expanded to five states and was officially named Rite Aid Corporation. It was in this year that the company made its first public offering and started trading on the American Stock Exchange. Business was flourishing for the company, by 1972 Rite Aid operated 267 stores in ten states. By 1981, Rite Aid had become the third largest retail drugstore chain in the country, in 1983, the company had surpassed the $1 billion sales mark for the first time.…

    • 738 Words
    • 3 Pages
    Good Essays
  • Best Essays

    Walgreens

    • 2111 Words
    • 9 Pages

    The Walgreens chain began in 1901, with a drug store on the corner of Bowen Ave and Cottage Grove, Chicago, Illinois, United States owned by Galesburg native Charles R. Walgreen, Sr.[6] By 1915, there were five Walgreen drugstores. He added several improvements to the stores such as soda fountains and luncheon service. He also began to make his own line of drug products and was then able to control the quality of the items and sell them at lower prices. By 1916, 19 stores were in operation, all in Chicago. And in that same year, all the stores were consolidated under Walgreen Co. The 1920s was a very successful decade for Walgreens. In 1921, the company opened stores outside of residential areas and also introduced the malted milk shake in 1922. Walgreens also established its very own ice cream manufacturing plants to match the demand for ice cream at that time. By the mid 1920s, there were about 65 stores with an annual sale of 1.2 million dollars. By this time, Walgreens had expanded into other states like Wisconsin, Missouri, and Minnesota. By 1930, there were 397 stores in 87 cities with annual sales of 4 million dollars. The company did not really suffer from the Stock Market Crash and Great Depression. By 1934, Walgreens was operating in 33 states with over 600 stores. After Charles Walgreen Sr. died, his son Charles R. Walgreen Jr. took over and ran the chain until his retirement. The Charles R. Walgreen Jr. years were relatively prosperous, but lacked the massive expansion seen in the early part of the company. Charles "Cork" R. Walgreen III took over after Jr's retirement in the early 1970s, and brought the company through many modern initiatives, including the switch to a computer inventory based system (bar code scanning). The Walgreen family was not involved in senior management of the company for a short period following Charles' retirement. In 1986, it acquired the MediMart chain from…

    • 2111 Words
    • 9 Pages
    Best Essays
  • Good Essays

    Bausch and Lomb, Inc (a)

    • 1065 Words
    • 5 Pages

    AR increased significantly with some of the promissory notes are payable in June 1994 (6 months after sale)…

    • 1065 Words
    • 5 Pages
    Good Essays
  • Good Essays

    Kfc Vietnam

    • 6858 Words
    • 28 Pages

    Debt Securities versus Equity Securities Investments in securities can include both debt and equity securities. Debt securities reflect a creditor relationship such as investments in notes, bonds, and certificates of deposit; they are issued by governments, companies, and individuals. Equity securities reflect an owner relationship such as shares of stock issued by companies.…

    • 6858 Words
    • 28 Pages
    Good Essays
  • Better Essays

    debenture

    • 1522 Words
    • 7 Pages

    In order for a company to borrow money the creditors must have security. The creditor wants security to protect its position in case of the insolvency of the company; equally the company wants to be able to borrow without having to give such security to the lender that would restrict its ability to trade.…

    • 1522 Words
    • 7 Pages
    Better Essays
  • Good Essays

    Ar Rahn

    • 1089 Words
    • 5 Pages

    This is because, in case of non-payment, the pledged property will be sold or auctioned and the proceeds will be taken by the creditor to compensate for the losses as a result of the bad debt. However, the creditor is only entitled to the total amount owed to him by…

    • 1089 Words
    • 5 Pages
    Good Essays