Costco Financial Statements and Financial Ratios

Costco Financial Statements and Financial Ratios Analyzed

A Beginner's Guide to Costco Financial Analysis - 2021

$5.99
  • Included Easy to download PDF File.
  • Included Easy to use format.
  • Included Summarized Income Statements and Balance Sheets for the last 5 years..
  • Included Popular financial ratios for the last 5 years included... with calculations and formulas!
  • Included Expert tips to help with financial statements analysis.
  • Included Expert tips to help with financial ratios analysis.
  • NOT Included-Identify and discuss financial trends for the company..
  • NOT Included-Expert financial analysis done by Paul Borosky, MBA.
  • NOT Included- Analyst "Letter Grades" for the company's ratios.
  • NOT Included-Free Annual Reports Download for (5 Years)

Costco Financial Report by Paul Borosky, MBA. - 2020

$9.99
  • Included Easy to download PDF File.
  • Included Easy to use format.
  • Included Summarized Income Statements and Balance Sheets for the last 5 years..
  • Included Popular financial ratios for the last 5 years included... with calculations and formulas!
  • Included Expert tips to help with financial statements analysis.
  • Included Expert tips to help with financial ratios analysis.
  • Included Identify and discuss financial trends for the company.
  • Included Expert financial analysis done by Paul Borosky MBA.
  • Included Analyst "Letter Grades" for the company's ratios.
  • Included Free Annual Reports Download for the company (5 years).

Hey All,

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, I offer two reports, which are "A Beginner's Guide to Costco Financial Analysis" and "Costco Financial Report by Paul Borosky, MBA."  Both reports are written by myself, Paul Borosky, MBA., Doctoral Candidate, and published author, and include:

  • Summarized income statements for the last 5 years.
  • Summarized balance sheets for the last 5 years.
  • Five years’ 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 are provided in each section to help YOU conduct your OWN financial analysis!
  • Each section includes an “in other words” segment.  This is where I use plain English to explain concepts.

 

For a MORE in-depth review of the company's financial statements and ratios, make sure to buy my "Costco Financial Report".  The financial report includes all aspects of my "Beginner's Guide" plus a whole lot more...

  • Professional financial analysis of important income statements, balance sheets, and financial ratio trends.
  • "Letter Grade" is assigned to most financial statement line items and financial ratios to help you better understand their overall trends for the last 5 years.
  • Overall financial analysis summary for the company.

Enjoy the preliminary information and for a more detailed analysis, buy the financial report!

Sincerely,

Paul, MBA.

PDF/Downloadable Version

Costco 2020 Financial Report by Paul Borosky, MBA.
  • Included - Free Bonus Downloads: Annual Statements for the Last Five Years (10k reports)!
  • Included - Expert financial analysis done by Paul Borosky MBA.
  • Included - Analyst "Letter Grades" for ratios.
  • **See Terms and Conditions.

Costco 2021 Beginner's Guide

Table of Contents

  • Disclaimer 3
  • Forward 4
  • Income Statement 6
  • Costco’s Summarized Income Statements 6
  • Revenues 7
  • Cost of Goods Sold (COGS) 8
  • Selling, General, and Administrative Expenses (SG&A 8
  • Research and Development (R&D) 9
  • Operating Expenses 10
  • Earnings Before Interest and Taxes (EBIT 10
  • Interest Expense 11
  • Earnings Before Taxes (EBT) 12
  • Taxes 12
  • Net income 12
  • Tax Rate 13
  • Balance Sheet 15
  • Costco’s Summarized Balance Sheets 15
  • Cash 16
  • Short-Term Investments 17
  • Accounts Receivables 17
  • Inventory 18
  • Current Assets 19
  • Property, Plant, and Equipment (PP&E) 20
  • Total Assets 20
  • Accounts Payable 21
  • Accrued Expenses 22
  • Short-Term Debt 23
  • Total Current Liabilities 24
  • Long Term Debt (LT Debt) 25
  • Total Liabilities 26
  • Common Stock and Additional Paid-in Capital 27
  • Treasury 27
  • Retained Earnings 28
  • Total Equity 29
  • Financial Ratios 30
  • Costco’s Liquidity Ratios 31
  • Current Ratio 31
  • Quick Ratio 32
  • Cash Ratio 33
  • Costco’s Asset Ratios 35
  • Total Asset Turnover 36
  • Fixed Asset Turnover 37
  • Days Sales Outstanding 37
  • Inventory Turnover 38
  • Accounts Receivable Turnover 39
  • Accounts Payable Turnover 40
  • Other Asset Ratio Calculations 41
  • Working Capital Turnover 41
  • Average Days in Inventory 41
  • Average Days Payable 41
  • Costco’s Profitability Ratios 43
  • Return on Assets (ROA) 43
  • Return on Equity (ROE) 44
  • Net Profit Margin 45
  • Gross Profit Margin 46
  • Operating Profit Margin 46
  • Costco’s Debt Ratios 48
  • Debt Ratio 48
  • Debt to Equity Ratio 49
  • Times Interest Earned 50

Costco 2020 Financial Report

Table of Contents

  • Disclaimer 3
  • Forward 4
  • Company Summary 6
  • Financial Statement Introduction 9
  • Income Statement 10
  • Costco’s Income Statement – Summary Analysis 11
  • Income Statement Discussion 12
  • Balance Sheet 20
  • Balance Sheet – Summary Analysis 21
  • Balance Sheet Discussion 22
  • Financial Ratios 37
  • Liquidity Ratios 38
  • Liquidity Ratios - Summary Analysis 38
  • Liquidity Ratios Discussion 39
  • Current Ratio 39
  • Quick Ratio 40
  • Cash Ratio 40
  • Other Liquidity Ratios 41
  • Net Operating Working Capital 41
  • Asset Ratios 43
  • Asset Utilization Ratios - Summary Analysis 44
  • Asset Utilization Ratios Discussion 45
  • Total Asset Turnover 45
  • Fixed Asset Turnover 45
  • Days Sales Outstanding 46
  • Inventory Turnover 47
  • Accounts Receivable Turnover 48
  • Accounts Payable Turnover 49
  • Other Asset Ratio Calculations 49
  • Working Capital Turnover 49
  • Average Days in Inventory 50
  • Average Days Payable 50
  • Profitability Ratios 51
  • Profitability Ratios - Summary Analysis 52
  • Profitability Ratios Discussion 53
  • Return on Assets (ROA) 53
  • Return on Equity (ROE) 54
  • Profit Margin 54
  • Gross Profit Margin 55
  • Operating Profit Margin 56
  • Basic Earnings Power 57
  • ROCE 57
  • Capital Employed 57
  • Debt Ratios 58
  • Costco’s Debt Ratios - Summary Analysis 58
  • Debt Ratios Discussion 59
  • Long-Term Debt Ratio 59
  • Debt to Equity Ratio 59
  • Times Interest Earned 60
  • WACC 62
  • Book Value of WACC 62
  • Free Cash Flow (FCF) 64
  • Free Cash Flows – 2015 - 2019 64
  • Free Cash Flows – 5 Year Projections 65
  • Income Statement – Projections for 5 years 66
  • Income Statement – 5 Year Projections 66
  • Balance Sheet – Projections for 5 years 67
  • Balance Sheet – 5 Year Projections 67
  • Company Valuation and Intrinsic Stock Price 69
  • Appendix 1: Summarized Income Statement 70
  • Appendix 2: Income Statement – Percent of Sales    71
  • Appendix 3: Income Statement – Year over Year Growth   72
  • Appendix 4: Summarized Balance Sheet      73
  • Appendix 5: Balance Sheet as Percent of Total Assets         75
  • Appendix 6: Summarized Financial Ratios   76

Sample Financial Report

Sample Financial Report by Paul Borosky, MBA.
Financial Report Sample 2

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 its 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 2020 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, 2020 10k annual report, and Costco's 2019 10k annual report as the basis for information gathering. 

 

Section 1: Costco Income Statement Analyzed

In this section, I walk through a broad definition of 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 2016 to 2020, in most cases.

Revenue Growth:  Costco’s revenues in 2016 were $118 billion.  In the next several years, the organization will continually increase its revenues ending 2020 at $166.7 billion.  This moderate growth rate equates to approximately a 9% annual revenue growth.

The consistent and above-average annual growth rate shows that the company is currently in a business expansion cycle.  In a business expansion cycle, investors often forgo the expectation of dividend payouts in hopes of future revenue gains through increased retained earnings.  In Costco’s case, not only is the organization consistently increasing its revenues, but they are also increasing its dividend payouts as well.  Investors are being rewarded on two fronts!  What a great deal.

Costco 2021 Summary Income Statement

Column1

2021

2020 2019 2018

2017

Revenues

                 365,817

                 274,515                  260,174                  265,595

                   229,234

COGS

                 212,981

                 169,559                  161,782                  163,756

                   141,048

Gross Profit

                 152,836

                 104,956                    98,392                  101,839

                     88,186

 
SG&A

                   21,973

                   19,916                    18,245                    16,705

                     15,261

Depreciation

                   11,284

                   11,056                    12,547                    10,903

                     10,157

R & D

                   21,914

                   18,273                    16,217                    14,236

                     11,581

Other                            -                            -                            -                            -                             -
Total Operating Expenses

                   43,887

                   38,668                    34,462                    41,844

                     36,999

EBIT

                 108,949

                   66,288                    63,930                    59,995

                     51,187

Other Income

                        258

                        803                      1,807                      2,005

                       2,745

Interest Expense

                     8,750

                   12,629                      8,805                      6,500

                       3,500

EBT

                 109,207

                   67,091                    65,737                    55,500

                     50,432

Taxes

                   14,527

                     9,680                    10,481                    13,372

                     15,738

Net Income

                  94,680

                  57,411                   55,256                   59,531

                   48,351

 

Section 2: Costco Balance Sheet Analyzed

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 2016 to 2020.  Next, I then offer a summary analysis of Costco's important balance sheet line items.

Cash:  Costco’s cash position in 2016 was $3.3 billion.  In the next three years, the organization would moderately increase its cash position ending 2019 at $8.3 billion.  However, in 2020, the organization’s cash position would increase substantially, ending the year at $12.2 billion. 

The significant increase in cash may indicate that the organization needs more funds to maintain operations.  However, because the organization has shown impressive discipline with its continued revenue growth and moderate cost growth, increasing cash at such a substantial rate may indicate inefficiencies in using the current assets of the organization.  A better strategy would be for the firm to maintain their disciplinary ways and grow their cash position moderately similar to their revenue growth as well as operating cost growth.

 

Costco 2021 Summary Balance Sheet

Column1

2021

2020 2019 2018

2017

Cash

                     34,940

                 38,016                  48,844                  25,913

                 20,289

Short Term Investment

                     27,699

                 52,927                  51,713                  40,388

                 53,892

Account Receivable

                     26,278

                 16,120                  22,926                  23,186

                 17,874

Inventory

                       6,580

                   4,061                    4,106                    3,956

                   4,855

Other                              -                         -                         -                         -                         -
Current Assets

                 134,836

             143,713              162,819                93,443

               96,910

Net PPE

                     39,440

                 36,766                  37,378                  41,304

                 33,783

Goodwill                              -                         -                         -                         -                         -
Other                              -
Total Assets

                 351,002

             323,888              338,516              365,725

             375,319

Accounts Payable

                     54,763

                 42,296                  46,236                  55,888

                 44,242

Accrued Expense                              -                         -                         -

                 32,687

                 30,551

Accrued Taxes                              -                         -                         -                         -                         -
Notes Payable

                       6,000

                   4,996                    5,980                  11,964

                 11,977

LT Debt - Current

                       9,613

                   8,773                  10,260                    8,784

                   6,496

Other                         -                         -                         -
Total Current Liabilities

                   125,481

               105,392                105,718                116,866

               100,814

LT Debt

                   109,106

                 98,667                  91,807                  93,735

                 97,207

Other
Total Liabilities

                 287,912

             258,549              248,028              258,578

             241,272

Common Stock

                     57,365

                 50,779                  45,174                  40,201

                 35,867

Treasury                              -                         -                         -                         -                         -
Retained Earnings

                       5,562

                 14,966                  45,898                  70,400

                 98,330

Other
Total Equity

                   63,090

               65,339                90,488              110,601

             134,197

Total Equity & Liability

                 351,002

             323,888              338,516              365,725

             375,319

 

 

Section 3: Costco Financial Ratios Analyzed

For this section, I have chosen several different financial ratios to review for Costco from 2016 to 2020.  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 Total Asset Turnover

Costco’s total asset turnover ended in 2016 at 3.5.  In the next several years, the organization’s total asset turnover would continually fall, ending 2020 at 3.0.  This means that the organization is making less money on total assets managed.  To better utilize total assets, the organization needs to either sell off underutilized assets and equipment or moderate its fixed asset accumulation until its current assets under management are better optimized.  In other words, the company needs to stop buying stuff like buildings and heavy machinery before they fully optimize what they have now.

Costco's Return on Assets

Costco’s return on assets ended 2016 at 7%.  In the next three years, the organization’s return on assets would moderately grow to 8.06% in 2019.  However, in 2020, the organization’s return on assets would moderately fall to 7.2%.  The reduction in return on assets for the organization may be attributed to its inability to optimally exploit current asset opportunities.  In other words, the company is holding too much cash and possibly short-term investments.  A better strategy would be for the organization to better utilize its liquid assets by paying out increased dividends, investing in company expansion at a faster pace, or repurchasing stocks from the open market.  Any one of these actions may help improve the organization’s management of assets.

Costco 2021 Liquidity Ratios

Ratios

2021

2020

Current Ratio                           1.00                    1.13
Cash Ratio                           0.41                    0.54
Quick Ratio                           0.52                    0.64
Net Working Capital                              64                  3,276

Costco 2021 Asset Utilization

Ratios

2021

2020

Total Asset Turnover                           3.31                    3.00
Fixed Asset Turnover                           8.34                    7.65
Days Sales Outstanding                           3.12                    3.38
Inventory Turnover (Using Sales)                         14.81                  14.11
Inventory Turnover (Using COGS)                         12.90                  12.26
Accounts Receivable Turnover                       116.87                108.11
Working Capital Turnover                    3,061.39                  50.90
AP Turnover                         11.34                  11.28
Average Days Inventory                         28.29                  29.76
Average Days Payable                         32.19                  32.36
Costco 2021Profitability Ratios
Ratios

2021

2020

Return on Assets

8.45%

7.20%

Return on Equity

27.70%

21.40%

Net Profit Margin

2.56%

2.40%

Gross Profit Margin

12.88%

13.09%

Operating Profit Margin

3.42%

3.26%

Basic Earning Power

11.32%

9.78%

ROCE

22.49%

17.70%

Capital Employed                       29,827                30,712
ROIC

19.95%

15.62%

Costco 2021 Debt Ratios

Ratios

2021

2020

Debt Ratio

12.64%

13.70%

Debt/Equity

41.44%

40.68%

Times Interest Earned                       (39.23)                (33.97)