costco financial Essay

1266 Words Oct 31st, 2013 6 Pages
Appendix B: Financial analysis
Financial analysis is the mean to clarify most important factors that affected Costco performance and resulted in companies’ success. In order to reach that goal, we studied financial performance of Costco for 2008 to 2012. These data obtained from different sources such as Costco annual reports and other respectable financial sources.
At some levels comparison between leading companies in the industry such as Sam’s club and Bj’s has been made. The major problem that we faced during that process was that Sam’s club considered as subsidiary of Wall mart, which made comparison less sensitive.
By using financial statement, we calculated different financial ratios for liquidity, debt ratios and other
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Costco expanding and they are trying to maintain and increase their expansion rate. They tried to maintain the selling rate for each store and that’s one of the reason that they don’t expand that fast as some other companies.

Figure 4: cash flow statement. Investment activities:

Cash flow from financing activities:
Two main issues that should be attractive for investors are the big deduction of the long term debt and the amount of dividend paid by Costco specially in year 2012. Costco reduced its long term debt by more than 750 million which shows the stability of the company and of course less debt means less risk.
The dividend payment itself has been growing rapidly for last 5 years, almost 70 percent which considered as great sign for investors. On the other hand, the capital gain that investors earn over last five years alone would make them happy, Costco’s stock price doubled in last five years.

Figure 5: cash flow statement. Financing activities:

Last point that stands out in cash flow statement is the increase in international sale, which was accounted for 27 percent of Costco’s total sale in 2012. International sale for Costco has increased by 50 percent since 2008 which shows great international expansion for Costco.

Ratio Analysis:
Liquidity Ratios:
As it shows in chart 1, liquidity ratios shows perfect picture of the difference between wall mart and Costco,

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