Analysis and Interpretation of Profitability Balance sheets and income statements for Costco Wholesale Corporation follow. Costco...
Fantastic news! We've Found the answer you've been seeking!
Transcribed Image Text:
Analysis and Interpretation of Profitability Balance sheets and income statements for Costco Wholesale Corporation follow. Costco Wholesale Corporation Consolidated Statements of Earnings For Fiscal Years Ended ($ millions) September 2, 2018 Total revenue $141,576 Operating expenses Merchandise costs 123,152 Selling, general and administrative 13,876 Preopening expenses 68 Operating Income Other income (expense) 4,480 Interest expense 159 Interest income and other, ne (121) Income before income taxes 4,442 Provision for income taxes 1,263 Net income including noncontrolling interests 3,179 Net income attributable to noncontrolling interests (45) Net income attributable to Costco $3,134 Costco Wholesale Corporation Consolidated Balance Sheets ($ millions, except par value and share data) September 2, 2018 September 3, 2017 Current assets Cash and cash equivalents $6,055 $4,546 Short-term investments 1,204 1,233 Receivables, net 1,669 1,432 Merchandise inventories 11,040 9,834 Other current assets 321 272 Total current assets 20,289 17,317 Net property and equipment 19,681 18,161 Other assets 860 869 Total assets $40,830 $36,347 Current liabilities Accounts payable $11,237 $9,608 Accrued salaries and benefits 2,994 2,703 Accrued member rewards 1,057 961 Deferred membership fees 1,624 1,498 Other current liabilities 3,014 2,725 Total current liabilities 19,926 17,495 Long-term debt 6,487 6,573 Other liabilities 1,314 1,200 Total liabilities 27,727 25,268 Equity Preferred stock, $0.01 par value: Common stock, $0.01 par value: 4 4 Additional paid-in-capital 6,107 5,800 Accumulated other comprehensive loss (1,199) (1,014) Retained earnings 7,887 5,988 Total Costco stockholders' equity 12,799 10,778 Noncontrolling interests Total equity 304 301 13,103 11,079 Total liabilities and equity $40,830 $36,347 (a) Compute net operating profit after tax (NOPAT) for 2018. Assume that the combined federal and state statutory tax rate is 22%. (Round your answer to the nearest whole number.) 2018 NOPAT = 0 ($ millions) (b) Compute net operating assets (NOA) for 2018 and 2017. 2018 NOA = 0 (s millions) 2017 NOA = 0 (S millions) (c) Compute Costco's RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2018. (Do not round until final answer. Round two decimal places. Do not use NOPM x NOAT to calculate RNOA.) 2018 RNOA = O 2018 NOPM = 0 2018 NOAT = 0 (d) Compute net nonoperating obligations (NNO) for 2018 and 2017. Confirm the relation: NOA = NNO + Total equity. 2018 NNO = o ($ millions) 2017 NNO = 0 ($ millions) (e) Compute return on equity (ROE) for 2018. (Round your answers to two decimal places. Do not round until your final answer.) 2018 ROE = 0 (f) Infer the nonoperating return component of ROE for 2018. Use answers from above to calculate. Round your answer to two decimal places.) (g) Comment on the difference between ROE and RNOA. What does this relation suggest about Costco's use of equity capital? OROE > RNOA implies that Costco's equity has grown faster than its NOA. OROE > RNOA implies that Costco has taken on too much financial leverage. OROE > RNOA implies that Costco is able to borrow money to fund operating assets that yield a return greater than its cost of debt. OROE > RNOA implies that Costco increased its financial leverage during the period. Analysis and Interpretation of Profitability Balance sheets and income statements for Costco Wholesale Corporation follow. Costco Wholesale Corporation Consolidated Statements of Earnings For Fiscal Years Ended ($ millions) September 2, 2018 Total revenue $141,576 Operating expenses Merchandise costs 123,152 Selling, general and administrative 13,876 Preopening expenses 68 Operating Income Other income (expense) 4,480 Interest expense 159 Interest income and other, ne (121) Income before income taxes 4,442 Provision for income taxes 1,263 Net income including noncontrolling interests 3,179 Net income attributable to noncontrolling interests (45) Net income attributable to Costco $3,134 Costco Wholesale Corporation Consolidated Balance Sheets ($ millions, except par value and share data) September 2, 2018 September 3, 2017 Current assets Cash and cash equivalents $6,055 $4,546 Short-term investments 1,204 1,233 Receivables, net 1,669 1,432 Merchandise inventories 11,040 9,834 Other current assets 321 272 Total current assets 20,289 17,317 Net property and equipment 19,681 18,161 Other assets 860 869 Total assets $40,830 $36,347 Current liabilities Accounts payable $11,237 $9,608 Accrued salaries and benefits 2,994 2,703 Accrued member rewards 1,057 961 Deferred membership fees 1,624 1,498 Other current liabilities 3,014 2,725 Total current liabilities 19,926 17,495 Long-term debt 6,487 6,573 Other liabilities 1,314 1,200 Total liabilities 27,727 25,268 Equity Preferred stock, $0.01 par value: Common stock, $0.01 par value: 4 4 Additional paid-in-capital 6,107 5,800 Accumulated other comprehensive loss (1,199) (1,014) Retained earnings 7,887 5,988 Total Costco stockholders' equity 12,799 10,778 Noncontrolling interests Total equity 304 301 13,103 11,079 Total liabilities and equity $40,830 $36,347 (a) Compute net operating profit after tax (NOPAT) for 2018. Assume that the combined federal and state statutory tax rate is 22%. (Round your answer to the nearest whole number.) 2018 NOPAT = 0 ($ millions) (b) Compute net operating assets (NOA) for 2018 and 2017. 2018 NOA = 0 (s millions) 2017 NOA = 0 (S millions) (c) Compute Costco's RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2018. (Do not round until final answer. Round two decimal places. Do not use NOPM x NOAT to calculate RNOA.) 2018 RNOA = O 2018 NOPM = 0 2018 NOAT = 0 (d) Compute net nonoperating obligations (NNO) for 2018 and 2017. Confirm the relation: NOA = NNO + Total equity. 2018 NNO = o ($ millions) 2017 NNO = 0 ($ millions) (e) Compute return on equity (ROE) for 2018. (Round your answers to two decimal places. Do not round until your final answer.) 2018 ROE = 0 (f) Infer the nonoperating return component of ROE for 2018. Use answers from above to calculate. Round your answer to two decimal places.) (g) Comment on the difference between ROE and RNOA. What does this relation suggest about Costco's use of equity capital? OROE > RNOA implies that Costco's equity has grown faster than its NOA. OROE > RNOA implies that Costco has taken on too much financial leverage. OROE > RNOA implies that Costco is able to borrow money to fund operating assets that yield a return greater than its cost of debt. OROE > RNOA implies that Costco increased its financial leverage during the period.
Expert Answer:
Answer rating: 100% (QA)
Answers a NOPAT for 2018 including both Costcos and non controlling interest Sales and other operati... View the full answer
Related Book For
Business
ISBN: 978-0133354263
8th Canadian Edition
Authors: Ricky Griffin, Ronald J.Ebert , Frederick Starke, Melanie Lang, George Dracopoulos
Posted Date:
Students also viewed these accounting questions
-
Balance sheets and income statements for Best Buy Co., Inc. follow. Consolidated Statements of Earnings For Fiscal Years Ended ($ millions) February 26, 2011 February 27, 2010 February 28, 2009...
-
?? . Analysis and Interpretation of Profitability Balance sheets and income statements for 3M Company follow. Consolidated Statements of Income Years ended December 31 ($ millions) Net sales...
-
?? . Analysis and Interpretation of Profitability Balance sheets and income statements for 3M Company follow. Consolidated Statements of Income Years ended December 31 ($ millions) Net sales...
-
Determine the x-and y-intercepts on the graph of the equation. Graph the equation. y=-1.5x + 15
-
State whether each of the following is a stock or a flow, and explain. a. The gross domestic product. b. National saving. c. The value of the U.S. housing stock on January 1, 2012. d. The amount of...
-
Why should the planning horizon be at least as long as the cumulative lead time?
-
In Equation (3.109), the exponential of a matrix was defined. Data form Equation 3.109 a. Let \[A=\left(\begin{array}{ll} 2 & 0 \\ 0 & 0 \end{array} ight)\] Compute \(e^{A}\). b. Give a definition of...
-
In the audit of the Worldwide Wholesale Company, you did extensive ratio and trend analysis. No material exceptions were discovered except for the following: 1. Commission expense as a percent of...
-
Hi, please answer the following question and show your work. Thank you and hope you have a good weekend.. Question 1 2.3 pts In 2021, Sookie exchanged real estate used in her business for business...
-
Hook Industries is considering the replacement of one of its old drill presses. Three alternative replacement presses are under consideration. The relevant cash flows associated with each are shown...
-
Employee Analysis using pig latin script 1. load the data Employee_Advance.csv and create relation 2. Count the number of employee in each gender 3. count the number of employees in each department...
-
How do enzymes function in biological reactions?
-
What is natural selection?
-
How do the mitochondria in a cell function
-
Define photosynthesis.
-
6. (10 pts) The typical soda can is 2.5 inches in diameter and 4.5 inches high. You would think that the cans would be designed such that the total surface area is minimized, thus minimizing total...
-
On January 1, 2024, Lechner Company borrowed $120,000 on a 4%,5-year note with annual installment payments of $24,000 plusinterest due on December 31 of each year.What is the journal entry for the 2...
-
Choose two matrices A and B with dimension 2 x 2. Calculate det A, det B, and det (AB). Repeat this process until you are able to discover how these three determinants are related. Summarize your...
-
If you were starting your own small business, what are the key marketing pitfalls you would try to avoid?
-
Explain the difference between a vision and a mission.
-
What are the pros and cons of having government actively involved in subsidizing the development of green products?
-
List the five quality criteria in the provision of accounting information.
-
On what matching principle is financial accounting based?
-
Identify the five steps in the application of the decision-oriented approach to ac- counting.
Study smarter with the SolutionInn App