P4-33 Assess Credit Risk Financial statement information for Costco follows. Refer to these financial statements to answer the requirements. Sep. 1, 2019 Sep. 2. 2018 COSTCO WHOLESALE CORPORATION Consolidated Balance Sheets Amounts in millions, except par value and share data Assets Current assets Cash and cash equivalents. Short-term investments Receivables, net Merchandise inventories Other current assets. Total current assets Property and equipment $ 8,384 1,060 1.535 11.395 $ 6,055 1.204 1,669 11.040 321 23.485 20.289 Land Buildings and improvements Equipment and fixtures Construction in progress 6.417 17,136 7.801 1.272 32,626 (11.736) 20,890 1,025 45.400 6,193 16,107 7.274 1.140 30,714 (11.033) 19,681 860 40,830 Less accumulated depreciation and amortization Net property and equipment Other assets Total assets Liabilities and Equity Current liabidities Accounts payable Accrued salaries and benefits Accrued member rewards Deferred membership foes Current portion of long-term debt Other current liabilities Total current liabilities Long-term debt excluding current portion Other liabilities 11.679 3.178 1,180 1.711 1.099 3.792 23.237 5.124 1,455 29.816 11.237 2,994 1,057 1.624 90 2.924 19.926 6,487 1,314 27.727 6,417 Total babies Equity Preferred stock $0 01 Par value: 100,000,000 shares authorized no shares issued and outstanding Common stock $0.01 Par value: 900.000.000 shares authored 439,625,000 and 438,189.000 shares issued and outstanding Additional paid in capital Accumulated other comprehensive loss Retained earnings Total Costco stockholders' equity Noncontrolling interests Total Totalbites and equity 10.258 15.24 341 6,107 (1.199) 7.387 12.799 304 13. 103 $40 BSO 15.584 $45.400 COSTCO WHOLESALE CORPORATION Consolidated Statements of Income $138,434 3,142 141,576 b. Summarize findings in a conclusion about the company's credit risk. Are there any concerns about the dit Risk Analysis and Interpreta Sep. 1, 2019 Sep. 2, 2018 52 Weeks Ended (amounts in millions) $149,351 Revenue: 3,352 Net sales Membership fees 152.703 Total revenue 132.886 123,152 Operating expenses: 14,994 13,876 Merchandise costs 86 Selling, general and administrative. 68 Preopening expenses 4,737 4.480 Operating income Other income (expense) (150) (159) Interest expense 178 121 Interest income and other, net 4,765 4,442 Income before income taxes 1,061 1,263 Provision for income taxes 3,704 3.179 Net income including noncontrolling interests (45) (45) Net income attributable to noncontrolling interests. $ 3,659 $ 3,134 Net income attributable to Costco Required a. Use the financial statements and the information below to compute the following profitability and coverage, liquidity and solvency ratios for 2018 and 2019: ROE, ROA and RNOA, times interest earned, free cash flow to debt, current ratio, quick ratio, liabilities-to-equity ratio, and total debt- to-equity ratio. (Total assets, total equity, and equity attributable to Costco shareholders in 2017 were $36,347 million, $11,079 million and $10,778 million respectively.) Comment on any observed trends. $ millions Sep. 1, 2019 Sep. 2, 2018 NOPAT Average NOA $ 3,682 $ 3,209 Cash from operations 12,692 12,147 CAPEX 6,356 5,774 2,998 2,969 company's ability to meet its debt obligations
