Costco Income Statement All numbers in thousands Revenue 9/2/2018 Total Revenue 141,576,000 Preferred Stock Common Stock Retained Earnings Treasury Stock Capital Surplus Other Stockholder Equity Total stockholders' equity Net Tangible Assets 4,000 7,887,000 -1,199,000 6,107,000 -1,199,000 Costco Balance Sheet Period Ending 9/2/2018 Current Assets Cash And Cash 6,055,000 Equivalents Short Term Investments 1,204,000 Net Receivables 1,669,000 Inventory 11,040,000 Other Current Assets 321,000 Total Current Assets 20,289,000 Long Term Investments Property, plant and 19,681,000 equipment Goodwill 123,152,000 18,424,000 12,799,000 Cost of Revenue Gross Profit Operating Expenses Research Development Selling General and Administrative Non Recurring 12,799,000 13,876,000 1. Compute the following ratios for the firm that you are analyzing, for the most recent period: Others 137,096,000 4,480,000 Intangible Assets Accumulated Amortization Other Assets Total Operating Expenses Operating Income or Loss Income from Continuing Operations Total Other Income/Expenses Net 860,000 -38,000 316,000 Earnings Before Interest and Taxes 4,480,000 Days sales in receivables = 365 days Receivables turnover Total asset turnover = Sales Total assets Capital intensity - Total assets Sales IV. Profitability ratios Profit margin = Net Income Sales Return on assets (ROA) = Net income Total assets Return on equity (ROE) - Net income Total equity ROE Net income Sales Assets Sales Assets Equity Market value ratios Price-earnings ratio = Price per share Earnings per share Market-to-book ratio Market value per share Book value per share 1. Short-term solvency, or liquidity, ratios Current ratio Current assets Current liabilities Quick ratio Current assets - Inventory Current liabilities Cash Cash ratio = Current liabilities II. Long-term solvency, or financial leverage, ratios Total debt ratio = Total assets - Total equity Total assets Debt-equity ratio = Total debt/Total equity Equity multiplier = Total assets/Total equity Times interest earned ratio = EBIT Interest Cash coverage ratio = EBIT + Depreciation Interest III. Asset utilization, or turnover, ratios Inventory turnover - Cost of goods sold Inventory Days sales in inventory = 365 days Inventory turnover Sales 40,830,000 Interest Expense -159,000 4,442,000 Income Before Tax 11,237,000 Income Tax Expense 1,263,000 90,000 Minority Interest 304,000 4,541,000 Deferred Long Term Asset Charges Total Assets Current Liabilities Accounts Payable Short/Current Long Term Debt Other Current Liabilities Total Current Liabilities Long Term Debt Other Liabilities Deferred Long Term Liability Charges Minority Interest Negative Goodwill Total Liabilities 3,179,000 19,926,000 Net Income From Continuing Ops Non-recurring Events Discontinued Operations Receivables turnover Accounts receivable 6,487,000 924,000 Extraordinary Items Effect Of Accounting Changes 304,000 Other Items Net Income 2. Comment on the financial condition of the firm in each of the above 5 categories in 2 or 3 sentences each. Use the ratios of your firm as evidence of your assertions by comparing it to some benchmark (historical ratios, competitors, market or industry average, etc.). If certain ratios are not applicable to your firm (if your firm doesn't have debt or inventory, for example), still write on these ratios and how the absence of these items affects the firm - both the costs and benefits. 27,727,000 3,134,000 Stockholders' Equity Net Income Preferred Stock And Other Adjustments Net Income Applicable To Common Shares 3. Decompose the ROE of this firm using the extended Du-Pont Analysis. 3,134,000 Misc. Stocks Options Warrants Redeemable Preferred Stock EBIT Margin Interest Tax Burden "Burden Asset Tumover * Leverage 4. Compare these components of ROE for the firm's current period its past periods to understand the time trends. 5. Compare these components of ROE for the firm's with its major competitor(s). 6. Now use the trends from questions 4 and 5 along with your own forecast of future macro-economic conditions to forecast the firm's Earnings per share and cash flow per share. See the Sample Financial statement analysis in the course content for an example. To do this: a. First, make a common sized income statement for the last 3 to 5 years (every number as a percentage of revenue sales). b. Next, measure the revenue growth for each year in the historical window. c. Forecast future revenue growth both quantitatively (for example, using a linear fit trend line/regression) and qualitatively. d. Produce forecasted income statements for future years using your revenue growth projections and common-sized balance sheets. Adjust items in income statement based on trends you see in past data, competitors, and the economy as a whole. Costco Income Statement All numbers in thousands Revenue 9/2/2018 Total Revenue 141,576,000 Preferred Stock Common Stock Retained Earnings Treasury Stock Capital Surplus Other Stockholder Equity Total stockholders' equity Net Tangible Assets 4,000 7,887,000 -1,199,000 6,107,000 -1,199,000 Costco Balance Sheet Period Ending 9/2/2018 Current Assets Cash And Cash 6,055,000 Equivalents Short Term Investments 1,204,000 Net Receivables 1,669,000 Inventory 11,040,000 Other Current Assets 321,000 Total Current Assets 20,289,000 Long Term Investments Property, plant and 19,681,000 equipment Goodwill 123,152,000 18,424,000 12,799,000 Cost of Revenue Gross Profit Operating Expenses Research Development Selling General and Administrative Non Recurring 12,799,000 13,876,000 1. Compute the following ratios for the firm that you are analyzing, for the most recent period: Others 137,096,000 4,480,000 Intangible Assets Accumulated Amortization Other Assets Total Operating Expenses Operating Income or Loss Income from Continuing Operations Total Other Income/Expenses Net 860,000 -38,000 316,000 Earnings Before Interest and Taxes 4,480,000 Days sales in receivables = 365 days Receivables turnover Total asset turnover = Sales Total assets Capital intensity - Total assets Sales IV. Profitability ratios Profit margin = Net Income Sales Return on assets (ROA) = Net income Total assets Return on equity (ROE) - Net income Total equity ROE Net income Sales Assets Sales Assets Equity Market value ratios Price-earnings ratio = Price per share Earnings per share Market-to-book ratio Market value per share Book value per share 1. Short-term solvency, or liquidity, ratios Current ratio Current assets Current liabilities Quick ratio Current assets - Inventory Current liabilities Cash Cash ratio = Current liabilities II. Long-term solvency, or financial leverage, ratios Total debt ratio = Total assets - Total equity Total assets Debt-equity ratio = Total debt/Total equity Equity multiplier = Total assets/Total equity Times interest earned ratio = EBIT Interest Cash coverage ratio = EBIT + Depreciation Interest III. Asset utilization, or turnover, ratios Inventory turnover - Cost of goods sold Inventory Days sales in inventory = 365 days Inventory turnover Sales 40,830,000 Interest Expense -159,000 4,442,000 Income Before Tax 11,237,000 Income Tax Expense 1,263,000 90,000 Minority Interest 304,000 4,541,000 Deferred Long Term Asset Charges Total Assets Current Liabilities Accounts Payable Short/Current Long Term Debt Other Current Liabilities Total Current Liabilities Long Term Debt Other Liabilities Deferred Long Term Liability Charges Minority Interest Negative Goodwill Total Liabilities 3,179,000 19,926,000 Net Income From Continuing Ops Non-recurring Events Discontinued Operations Receivables turnover Accounts receivable 6,487,000 924,000 Extraordinary Items Effect Of Accounting Changes 304,000 Other Items Net Income 2. Comment on the financial condition of the firm in each of the above 5 categories in 2 or 3 sentences each. Use the ratios of your firm as evidence of your assertions by comparing it to some benchmark (historical ratios, competitors, market or industry average, etc.). If certain ratios are not applicable to your firm (if your firm doesn't have debt or inventory, for example), still write on these ratios and how the absence of these items affects the firm - both the costs and benefits. 27,727,000 3,134,000 Stockholders' Equity Net Income Preferred Stock And Other Adjustments Net Income Applicable To Common Shares 3. Decompose the ROE of this firm using the extended Du-Pont Analysis. 3,134,000 Misc. Stocks Options Warrants Redeemable Preferred Stock EBIT Margin Interest Tax Burden "Burden Asset Tumover * Leverage 4. Compare these components of ROE for the firm's current period its past periods to understand the time trends. 5. Compare these components of ROE for the firm's with its major competitor(s). 6. Now use the trends from questions 4 and 5 along with your own forecast of future macro-economic conditions to forecast the firm's Earnings per share and cash flow per share. See the Sample Financial statement analysis in the course content for an example. To do this: a. First, make a common sized income statement for the last 3 to 5 years (every number as a percentage of revenue sales). b. Next, measure the revenue growth for each year in the historical window. c. Forecast future revenue growth both quantitatively (for example, using a linear fit trend line/regression) and qualitatively. d. Produce forecasted income statements for future years using your revenue growth projections and common-sized balance sheets. Adjust items in income statement based on trends you see in past data, competitors, and the economy as a whole