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Exhibit 1 Sales Revenue for Major Retailers, Logarithmic Scale ( 1 9 5 5 - 2 0 0 0 ) NB: Federated Department Store sales

Exhibit 1
Sales Revenue for Major Retailers, Logarithmic Scale (1955-2000)
NB: Federated Department Store sales 1987-1989 estimated. Company operated in bankruptcy during this
period.
? BJ's growth rate from 1994 to 2000 was 13.6%.
? Costco merged with Price Club during this period, which greatly increased sales. In 1992, the year
before the merger, Costco had sales of $6.6 billion. In 1993, the combined companies reported sales of
$15.5 billion.The following questions may help you to guide and focus your analysis:
Costco Wholesale Corporation: Financial Statement Analysis
1- Analyze Costcos common-size income statements (See Exhibit 9) by discussing its components and the trends over the five years. There is no threshold.
2- Analyze Costcos common-size balance sheets (See Exhibit 9) by discussing its components and the trends over the five years. There is no threshold.
3- Using Costcos sustainable growth model ratios provided in the case, analyze the changes over the five years in ROE, Dividend payout, ROA, Financial leverage, Asset turnover, Net Profit/Income margin (also referred to as Net margin), Pre-tax income & Net income (See Exhibit 10).
4- Benchmark and analyze the following ratios among the four competitors (Costco, Sears, Wal-Mart, and BJs) See Exhibit 11:
Gross profit margin (or Gross margin)
Operating profit margin (or Operating margin)
Net profit margin (or Net margin)
Current ratio Inventory turnover
Average receivables period (Receivables collection period)
Average payables period (Days of payables outstanding)
5- Based on the information given in the case and your above analysis, which of the four companies would give you a warning sign for potential earnings management? Explain your answer.Margarita Torres: Other Ratios for Costco and Competitors (2001)
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