ASSURANCE OF LEARNING EXERCISES Using the financial ratios provided in Table 4.1 and the financial statement infor. mation presented below for Costco Wholesale Corporation, calculate the follow- ing ratios for Costco for both 2013 and 2014: 1. 1 a. Gross profit margin 0 b. Operating profit margin c. Net profit margin d. Times-interest-earned (or coverage) ratio e. Return on stockholders' equity f. Return on assets g. Debt-to-equity ratio h. Days of inventory i. Inventory turnover ratio j. Average collection period 2013 2014 Net sales $110,212 $102,870 Membership fees 2,428 2,286 Total revenue 112,640 105,156 Merchandise costs $ 91,948 98,458 Selling, general, and administrative 10,899 10,155 Operating income 3,220 3,053 Other income (expense) Interest expense.. (113) (99) Interest income and other, net 90 97 Income before income taxes 3,197 3,051 Provision for income taxes 1,109 990 Net income including noncontrolling interests 1 k 2,088 2,061 Net income attributable to noncontrolling interests (22) (30) $ 2,039 Net income 2,058 Basic earnings per share 4.69 4.68 $ Diluted earnings per share 4.63 4.65 Source: Costco Wholesale Corporation 2014 10-K. Consolidated Balance Sheets for Costco Wholesale Corporation, 2013-2014 (in millions, except per share data) September 1, 2013 August 31, 2014 Assets Current Assets 4,644 $ 5,738 Cash and cash equivalents 1,480 1,577 Short-term investments 1,026 1,148 Receivables, net 7,894 8,456 Merchandise inventories (continued) August 31, 2014 September 1, 2013 669 621 Deferred income taxes and other current assets $15,840 17,588 Total current assets Property and Equipment $ 4,409 $4,716 Land 12,522 11,556 Buildings and improvements 4,845 4,472 Equipment and fixtures 592 Construction in progress 585 22,675 21,022 (7,845) (7.141) Less accumulated depreciation and amortization. 13,881 14,830 Net property and equipment 606 562 Other assets $30,283 $33,024 Total assets Liabilities and Equity Current Liabilities $ 7,872 $8,491 Accounts payable 2,037 2,231 Accrued salaries and benefits 710 773 Accrued member rewards 442 382 Accrued sales and other taxes 1,167 1,254 Deferred membership fees 1,089 1,221 Other current liabilities 13,257 14,412 Total current liabilities 4,998 5,093 Long-term debt, excluding current portion 1,016 1,004 Deferred income taxes and other liabilities $19,271 20,509 Total liabilities Commitments and Contingencies Equity Preferred stock $0.005 par value: 100,000,000 shares authorized; no shares issued and outstanding C 2 Common stock $0.005 par value; 900,000,000 shares authorized; 436,839,000 and 432,350,000 shares issued and outstanding Additional paid-in capital $ 4,670 $ 4,919 (122) Accumulated other comprehensive (loss) income (76) (continuec August 31, September 1, 2014 2013 Retained earnings 7,458 6,283 Total Costco stockholders' equity 12,303 10,833 Noncontrolling interests 212 179 Total equity 11,012 12,515 Total Liabilities and Equity $30,283 $33,024