1. How are CVS’s balance sheet and ratios impacted by its $40 billion bond issuance?

2. CVS issued $40 billion in bonds
Issued bonds on March 9, 2018
3rd largest US corporate bond issuance ever
Proceeds will be used to help pay for CVS acquisition of Aetna
Bonds range from two-year bonds to 30-year bonds

3. Question 1
What is the impact of the bond issuance on the balance sheet of CVS? What accounts would increase or decrease?

4. Question 2
How would CVS’s current ratio be impacted, if at all, by the bond issuance? How would its debt ratio be impacted?

5. Question 3
What would happen to CVS’s times- interest-earned ratio as a direct result of the bond issuance? Does this bond issuance increase risk or decrease risk for CVS? Explain.

6. Question 4
Why might CVS have decided to issue $40 billion of bonds for the acquisition of Aetna rather than issuing additional common stock?

7. Question Recap
What is the impact of the bond issuance on the balance sheet of CVS? What accounts would increase or decrease?
How would CVS’s current ratio be impacted, if at all, by the bond issuance? How would its debt ratio be impacted?
What would happen to CVS’s times-interest-earned ratio as a direct result of the bond issuance? Does this bond issuance increase risk or decrease risk for CVS? Explain.
Why might CVS have decided to issue $40 billion of bonds for the acquisition of Aetna rather than issuing additional common stock?

8. For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at Questions or comments? Dr. Wendy Tietz at