Rite Aid 2016 Annual Report Download - page 85

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RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended February 27, 2016, February 28, 2015 and March 1, 2014
(In thousands, except per share amounts)
1. Summary of Significant Accounting Policies (Continued)
respectively. The Retail Pharmacy segment’s principal classes of products in fiscal 2016 were the
following:
Percentage
Product Class of Sales
Prescription drugs ......................................... 69.1%
Over-the-counter medications and personal care ................... 9.8%
Health and beauty aids ..................................... 4.8%
General merchandise and other ............................... 16.3%
Fiscal Year
The Company’s fiscal year ends on the Saturday closest to February 29 or March 1. The fiscal
years ended February 27, 2016, February 28, 2015 and March 1, 2014 included 52 weeks.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and all of its
100 percent owned subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and highly liquid investments, which are readily
convertible to known amounts of cash and which have original maturities of three months or less when
purchased.
Allowance for Uncollectible Receivables
Approximately 97.8% of prescription sales are made to customers who are covered by third-party
payors, such as insurance companies, government agencies and employers. The Company recognizes
receivables that represent the amount owed to the Company for sales made to customers or employees
of those payors that have not yet been paid. The Company maintains a reserve for the amount of these
receivables deemed to be uncollectible. This reserve is calculated based upon historical collection
activity adjusted for current conditions.
Inventories
Inventories are stated at the lower of cost or market. Inventory balances include the capitalization
of certain costs related to purchasing, freight and handling costs associated with placing inventory in its
location and condition for sale. The Company uses the last-in, first-out (‘‘LIFO’’) cost flow assumption
for substantially all of its inventories. The Company calculates its inflation index based on internal
product mix and utilizes the link-chain LIFO method.
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