Costco Financial Statements and Financial Ratios Analyzed from 2015 to 2019
Thanks for visiting my Costco Financial Report page. On this page, you will be able to find preliminary information about Costco's current financial performance as well as some historical track records and trends.
For a more detailed examination of Costco's financial performance, please check out the "Financial Report". In this report, written by myself, Paul Borosky, MBA., Doctoral Candidate, and published author, you will find:
- Summarized income statement for the last 5 years.
- Summarized balance sheet for the last 5 years.
- Summary analysis by myself of important income statement, balance sheet, and financial ratio trends and other happenings.
- Five year’s worth of over twenty common financial ratios presented with formulas, calculations, and analysis tips for each ratio.
- Line by line description, explanation, and analysis tip for most financial statement line items and financial ratios.
- Professional financial analysis tips provided in each section to help YOU conduct your OWN financial analysis!
- Each section includes an “in other words” segment. This is were I use plain English to explain concepts.
Enjoy the preliminary information and for a more detailed analysis, buy the financial report!
- Company Report comes with a 7-day Limited 100% MONEY BACK GUARANTEE.
- Free Bonus Downloads: Costco's Annual Statements for the Last Five Years (10k reports)!
Sample Financial Report
Costco: Brief Summary
Costco Incorporated is one of the most sought-after stocks in the world. The company’s legendary founders, James Sinegal and Jeffrey Brotman, are world-renowned. Costco Inc. continues to innovate and disrupt their industry under the current leadership of Craig Jelinek.
These circumstances have resulted in the organization becoming an industry leader. For some, these facts alone are reason enough to buy stock in the company.
Costco Financial Report Sources
“Costco 2019 Company Analysis: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by, Paul Borosky, MBA. and owner of Quality Business Plan. In this report, the author selected Costco's 2018 10k, 2017 10k annual report, 2016 10k annual report, 2015 10k annual report, and Costco's 2019 10k annual report as the basis for information gathering.
Section 1: Costco Income Statement Analyzed 2015 to 2019
In this section, I walk through a broad definition as to what an income statement is and why it is important. From this, I then discuss and define income statement line items, such as revenues, gross profits, etc. in detail. After each line item is defined and discussed, I finally offer a summary analysis of Costco's important income statement line item trends from 2015 to 2019, in most cases.
Revenue Growth: Costco’s revenue has grown at an average rate of 7.1% over the last five years. In the last three years, the growth rate has ranged from 7.9% to 9.7%. However, the growth rate from 2019 to 2018 was only 7.9%, which is off their high of 9.7%. If this trend continues, then there future net earnings may be mitigated substantially.
SG&A: The company’s SG&A has ranged between 9.8% to 10.2%. In the last two years, this line item has stayed consistent at 9.8%. This shows that the organization has moderated its overhead costs to align with revenue growth. As a result, the firm may have developed a sustainable competitive advantage over other wholesale outlets.
Costco Income Statement Summary 2019
|R & D||-||-||-||-||-|
Section 2: Costco Balance Sheet Analyzed from 2015 to 2019
For Costco's balance sheet, I again go through each important line item from the balance sheet. In reviewing each line item, I will define Costco's balance sheet line items, such as cash, property, plant and equipment, and liabilities between 2015 to 2019. Next, I then offer a summary analysis of Costco's important balance sheet line items.
Cash: Costco’s cash position has grown from $4.8 billion in 2015 to $8.3 billion in 2019. The substantial growth in cash means that the organization either needs more money to support operations, or the company is not optimally using their excess cash. A better strategy would be to identify a budget that the company needs for cash and invest the rest of the funds in short-term investments.
Short-term investments: The organization ended 2015 with $1.6 billion in short-term investment. As of 2019, their short-term investment position fell to $1.1 billion. This means the company has fewer funds in its short-term investment account. However, the cash position almost doubled. This strategy indicates that the company is continually utilizing its cash in a sub-optimal manner. A better strategy would be to continually increase their short-term investment position and only hold enough cash needed to sustain operations.
Costco Summary of Balance Sheet 2019
|Short Term Investment||1,060||1,204||1,233||1,350||1,618|
|LT Debt - Current||1,699||90||86||1,100||1,283|
|Total Current Liabilities||23,237||19,926||17,495||15,575||16,540|
|Total Equity & Liability||45,400||40,830||36,347||33,163||33,440|
Section 3: Costco Financial Ratios Analyzed from 2015 to 2019
For this section, I have chosen several different financial ratios to review for Costco from 2015 to 2019. In reviewing each of Costco's financial ratios, I first start with defining the financial ratio. Next, I supply the financial formula for calculating the specific ratio. Finally, I offer a brief analysis of Costco's Important Financial ratios.
Costco's Current Ratio
Costco’s current ratio has fluctuated between 1.05 and .98 over the last five years. Industry standards for the current ratio are 1.0. This indicates that the company maintains a solid balance with having enough current assets to cover its short-term liabilities.
However, some retail and wholesale organizations have been trending towards a lower current ratio. This trend allows the organization to fully exploit cash-generating revenue lines, such as retail and wholesale sales.
Costco's Total Asset Turnover
Costco’s total asset turnover has maintained a relatively consistent showing over the last five years. The ratios range has been between 3.36 to 3.58. However, in the last three years, there has been a steady decline in the total asset turnover ratio. This shows that the firm may be underutilizing their assets as they grow. This often happens when an organization holds significant cash.
Costco's Return on Assets
Costco’s return on assets has increased from 7.11% in 2015 to 8.06% in 2019. This shows that the company is continually increasing its revenues using fewer assets for its operations.
Costco's Debt Ratio
Costco’s debt ratio ended 2015 at 14.55%. Over the last five years, the organization was able to reduce its debt ratio to 11.29%. This indicates that the company has been utilizing equity funding for growth and operations as compared to its reliance on debt. This capital structure is excellent for companies that may be susceptible to economic downturns such as recessions. Unfortunately, this conservative strategy does come with negative consequences. Specifically, the organization may be missing out on expansion opportunities due to the scarcity of liquid resources.
Costco Liquidity Ratios 2019
|Net Working Capital||6,459||4,533|
Costco Asset Utilization 2019
|Total Asset Turnover||3.36||3.47|
|Fixed Asset Turnover||7.31||7.19|
|Days Sales Outstanding||3.67||4.30|
|Accounts Receivable Turnover||99.48||84.83|
|Working Capital Turnover||23.64||31.23|
|Average Days Inventory||0.04||0.04|
|Average Days Payable||0.04||0.03|
Costco Profitability Ratios
|Return on Assets||8.06%||7.68%|
|Return on Equity||23.48%||23.92%|
|Net Profit Margin||2.40%||2.21%|
|Gross Profit Margin||12.98%||13.01%|
|Operating Profit Margin||3.10%||3.16%|
|Basic Earning Power||10.43%||10.97%|
Costco Long-term Debt
|Times Interest Earned||31.58||28.18|