Corporation is a multinational membership warehouse club with 741 stores in ten countries.
Established in Seattle Washington over 30 years ago, Costco has grown to
become the second largest global retailer after Walmart. Since its inception, Costco has maintained a
strong stock price and financials even during times of economic downturn. This report will summarize Costco’s financial
performance over the past 5 years including some financial statement and ratio
analysis, corporate risk factors, discuss critical accounting policies, and current
legal proceedings the company is involved in using its 10k report.
A 10k, is a detailed
annual report summarizing a company’s financial performance which all U.S.
based corporations must file within 60 days of the end of its fiscal year with
the Securities and Exchange Commission.
It provides a thorough breakdown of a company’s financial statements, gives
investor information, and discusses future corporate goals and visions. 10k reports are of one of the most
significant and financially plausible document a company files. We will review some selected financial
results from the analysis done.
Horizontal Analysis, also referred to as
trend analysis, shows the changes in a company’s financial data over a given
period of time. The
data displays the difference in totals during a period and the percent of
change (increase or decrease). Costco’s
Income Statement from 2013 to 2017 was used to conduct the about analysis. Refer to Exhibit 1
Net sales increased by almost 9% in 2017
to $126,172. This increase was related
to the opening of 26 warehouse stores, 13 in the United States and 13
internationally. Revenue from membership
fees increased to $2,853 (8%) due to increased annual fee premiums, new
membership sign-up at new stores and customer upgrades to executive memberships
at existing stores. There was an
increase in net income by 14% to $2,679 which was the lowest annual increase
over the past five years. Changes in net
sales over the five-year period are mainly attributable to the amount of stores
the company opens annually. Net
increases and decreases in revenue and net income during the selected period
have been based on some external economic factors such as increases in fuel
prices, foreign currency exchange rates.