Costco Financial Analysis Report (5 pages single spaced, no in-text citation or references required). Attachments are required to complete report.
• First attachment has FAP requirements / format for paper and additional tabs with analysis.
• Second attachment 2013 Costco Annual Report – 80 -85% of the information for this paper comes from this report.
Requirements/Format:
1 Company/Industry Profile
a. When and how did the industry start? Provide a brief history of the industry through today
b. Who started the company and when did it start.
i. Provide a brief history of the company through today.
ii. Summary of what products do they sell.
iii. Major competitors
2 Balance Sheet
a. Current Assets-define
i. Cash and Cash Equivalents-define
ii. Accounts Receivable-define
1 List major customers
2 How is the allowance for doubtful accounts calculated?
iii. Inventories-define
1 List what makes up inventory
2 How is inventory accounted for-FIFO, LIFO, average cost
b. Property, Plant & Equipment-define
i. List what makes it up
ii. What depreciation methods and useful lives are used
c. Intangible Assets-define
i. List what makes it up-comment on any major change
ii. How is goodwill impairment calculated? Was there an impairment this year?
iii. What intangible assets are amortized and over what period?
d. Current Liabilities-define
i. Accounts Payable-define
ii. Accrued Liabilities-define
e. Long-term debt-define
f. Stockholders Equity
i. List major sections-such as preferred stock, common stock, additional paid-in capital, retained earnings, treasury stock
ii. Who are major shareholders?
g. Commitments, contingencies & off-balance sheet financing-list & describe. Examples include raw materials and foreign currency purchase agreements, pensions, etc.
3 Income Statement
a. Revenue/Sales-what is sold, when is a sale recorded
b. Cost of Sales-what does it include
c. Selling, Marketing & Administrative-what does it include
d. Gain (Loss) on sale of business-what was sold
e. Other
i. Change in accounting principle-what was the change
ii. Discontinued operations-what was discontinued
iii. Extraordinary Items-what was the extraordinary item
f. Earnings per share-comment on change from last year
4 Statement of Cash Flows
a. Operating-define. Discuss the trend over the last three years
b. Investing-define. Discuss the trend over the last three years
c. Financing-define. Discuss the trend over the last three years.
5 Ratio Analysis (Tab)-describe what the ratio means, compare with last year and the industry, discuss the meaning
a. Liquidity-current & quick ratio
b. Activity-AR days outstanding, Inventory days outstanding, total asset turnover
c. Leverage-debt to equity, interest coverage
d. Profitability-net margin, gross margin, return on assets, return on equity
e. Market-Price/earnings ratio
6 Summary-comment on the company’s prospects for the future from the perspective of management, lender and investor.
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