Costco Financial Statement Analysis
Goal
- Write a report discussing Costco's operational performance over 1997-2002. Your report can be up to four pages double spaced.
- Please conclude your report with an executive summary no more than 150 words
Overview of the Assignment
This case is about a financial statement and a ratio analysis case involving a high-growth retail company. the study period for Costco case is the five-year period in the case from 1997 to 2002.
The case begins with an individual shareholder in Costco Wholesale Corp who is trying to evaluate the operational performance of the business she has invested in over the last five years. She seeks to answer two questions:
1) Has Costco become more or less financially efficient over this time period?
2) How has it financed its growth?
Your report should helpanswer her two questions.
You can organize your analysis of the issues into three parts to address the above two questions:
a. Common-size financial statements (for question 1)
b. Benchmarking ratios particular to retail companies (for question 1).
c. Sustainable growth analysis (for question 2)
o Focus on the financial analysis, rather than the calculation of ratios. What does it reveal?
o Think about the business behind the numbers in Costco's performance by discussing the company's strategy and other such qualitative information.