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please redo the original project> see document for more details. This is not much work considering we'd work on it together before Costco Consolidated Statement
please redo the original project> see document for more details. This is not much work considering we'd work on it together before
Costco Consolidated Statement of Income (amounts in Millions) ~ Page 40 ~ Horizontal Analysis Income Statement REVENUE 2015 2014 Net sales 113,666 110,212 102,870 Membership fees 2013 2015 2014 Vertical Analysis 2015 2014 2013 3.13% 7.14% 97.82% 97.84% 97.83% 2.18% 2.16% 2.17% 2,533 2,428 2,286 4.32% 6.21% Total revenue OPERATING EXPENSES 116,199 112,640 105,156 3.16% 7.12% Merchandise costs 101,065 98,458 91,948 2.65% 7.08% 86.98% 87.41% 87.44% 11,445 10,899 10,104 5.01% 7.87% 9.85% 9.68% 9.61% 65 63 51 3.17% 23.53% 0.06% 0.06% 0.05% 3,624 3,220 3,053 12.55% 5.47% 3.12% 2.86% 2.90% -124 -113 -99 9.73% 14.14% -0.11% -0.10% -0.09% 104 90 97 15.56% -7.22% 0.09% 0.08% 0.09% INCOME BEFORE INCOME TAXES 3,604 3,197 3,051 12.73% 4.79% 3.10% 2.84% 2.90% Provision for income taxes 1,195 1,109 990 7.75% 12.02% 1.03% 0.98% 0.94% Net income including noncontrolling interests 2,409 2,088 2,061 15.37% 1.31% 2.07% 1.85% 1.96% -32 -30 -22 6.67% 36.36% -0.03% -0.03% -0.02% 2,377 2,058 2,039 15.50% 0.93% 2.05% 1.83% 1.94% Selling, general and administrative Preopening expenses Operating income OTHER INCOME (EXPENSE) Interest expense Interest income and other, net Net income attributable to noncontrolling interests NET INCOME ATTRIBUTABLE TO COSTCO 100.00% 100.00% 100.00% Name Horizontal Consolidated Statements of Operations (USD $) 12 Months Ended In Millions Jan. 31, 2015 Feb. 01, 2014 $ 72,618 1.9% $ 71,279 -0.9% $ Sales 0 #DIV/0! 0 -100.0% Credit card revenues 72,618 1.9% 71,279 -2.8% Total revenues 51,278 2.5% 50,039 -1.0% Cost of sales (% is of Sales, not of Total Revenues) 14,676 1.5% 14,465 -1.2% Selling, general and administrative expenses 0 #DIV/0! 0 -100.0% Credit card expenses 2,129 6.7% 1,996 -2.3% Depreciation and amortization 0 -100.0% (391) 142.9% Gain on receivables transaction 4,535 -12.3% 5,170 -9.9% Earnings from continuing operations before interest expense and income taxes 882 -15.9% 1,049 53.4% Net interest expense 3,653 -11.4% 4,121 -18.5% Earnings from continuing operations before income taxes 1,204 -15.6% 1,427 -18.0% Provision for income taxes $ 2,449 -9.1% $ 2,694 -18.7% $ Net earnings from continuing operations Notes: (1) If your company does not report income from discontinued operations, you may omit the phrase "from continuing operations" in the above earnings captions. How much did sales change over the last year? What cause sales to go up or down? Not every factor that caused sales to change causes sales to go up, There were some offsetting facts. What are these offsetting factors? Perform this kind of analysis for the key items in operating income. No need to analyse depreciation and amortization, gains on receivable transaction, net interest etc. Primaraly interested in 3 components of operating income : sales, cost of sales and SG$A Analyse these 3 operating income: Example: What is included in SG$A? What parts of those expenses changes year to year? What is management doing to cause the SG&A to go up or down? Show how you calculated the ratios. Feb. 02, 2013 71,960 1,341 73,301 50,568 14,643 467 2,044 (161) 5,740 684 5,056 1,741 3,315 Name Vertical Consolidated Statements of Operations (USD $) Note: To facilitate comparison across years, "Sales" rather than "Total Revenues" are used in the denominator. 12 Months Ended In Millions Jan. 31, 2015 Feb. 01, 2014 $ 72,618 100.0% $ 71,279 100.0% $ Sales 0 0.0% 0 0.0% Credit card revenues 72,618 100.0% 71,279 100.0% Total revenues 51,278 70.6% 50,039 70.2% Cost of sales (% is of Sales, not of Total Revenues) 29.4% 29.8% Gross Profit % (Sales - COS)/Sales: 14,676 20.2% 14,465 20.3% Selling, general and administrative expenses 0 0.0% 0 0.0% Credit card expenses 2,129 2.9% 1,996 2.8% Depreciation and amortization 0 0.0% (391) -0.5% Gain on receivables transaction 4,535 6.2% 5,170 7.3% Earnings from continuing operations before interest expense and income taxes 882 1.2% 1,049 1.5% Net interest expense 3,653 5.0% 4,121 5.8% Earnings from continuing operations before income taxes 1,204 1.7% 1,427 2.0% Provision for income taxes $ 2,449 3.4% $ 2,694 3.8% $ Net earnings from continuing operations Feb. 02, 2013 71,960 100.0% 1,341 1.9% 73,301 101.9% 50,568 70.3% 29.7% 14,643 20.3% 467 0.6% 2,044 2.8% (161) -0.2% 5,740 8.0% 684 1.0% 5,056 7.0% 1,741 2.4% 3,315 4.6% Notes: (1) If your company does not report income from discontinued operations, you may omit the phrase "from continuing operations" in the above earnings captions. (2) For illustration purposes the Gross Profit % row was added to the normal income statement. Look at the cost of sales and determine if it went up or down from what it was in the previous year. What is contributing to the increase or decrease of cost of sales. (maybe this could be due to change in the cost of merchandise or a result of delining sales, etc) Include gross profit b/c it facilitates analysis. Speak to why the gross profit changed etc. Speak to why the SG&A declined/increased NOTE: use 1.2% 20.2% 70.6% NOT 70.65% 20.63% Compare across time: Time series analysis. Year over year changes is needed as well. Show how you calculated the ratios Include to balance sheet: For purposes of varifying calculation of other financial ratios (i.e. Liquidity, Solvency and profitability) show how you got calculations. Segment breakdown (dollars in billions) United States Canada Other International Total Segment breakdown (dollars in billions) United States Canada Other International Total Segment breakdown (dollars in billions) United States Canada Other International Total Segment breakdown (dollars in billions) U.S. Canada Other International Total Company Total Revenue Share in Revenue 2015 2014 2013 2015 2014 2013 84,351 80,477 75,493 72.59% 71.45% 73.90% 17,341 17,943 14,179 14.92% 15.93% 13.88% 14,507 14,220 12,484 12.48% 12.62% 12.22% 116,199 112,640 102,156 100.00% 100.00% 100.00% Total Revenue 2015 2014 2013 84,351 80,477 75,493 17,341 17,943 14,179 14,507 14,220 12,484 116,199 112,640 102,156 Cost of Sales Inventory Total Assets Key Items - Annual report 2015 Net revenues Gross profit SG&A expenses Net Income Operating Margin 2015 2014 2013 2.74% 2.34% 2.40% 4.45% 4.44% 5.33% 3.76% 3.83% 3.90% 3.12% 2.86% 2.99% Total Operating Income Share in Operating Inc. 2015 2014 2013 2015 2014 2013 2,308 1,880 1,810 63.69% 58.39% 59.29% 771 796 756 21.27% 24.72% 24.76% 545 544 487 15.04% 16.89% 15.95% 3,624 3,220 3,053 100.00% 100.00% 100.00% Increase in comparable warehouse sales excluding Increase in comparable impact of changes in warehouse sales foreign currency and gasoline 2015 2014 2013 2015 2014 2013 3% 5% 6% 6% 5% 6% -5% 2% 9% 8% 9% 9% -3% 3% 1% 6% 4% 2% 1% 4% 6% 7% 6% 6% Change in SG&A as a percent of sales: In BPS (basis points) Positive impact of lower warehouse operating costs Higher central operating costs Higher stock compensation expense Impact excluding lower gasoline prices Cost of Sales and Inventory Total Operating Income 2015 2014 2013 2,308 1,880 1,810 771 796 756 545 544 487 3,624 3,220 3,053 2015 16 -5 -4 7 2015 101,065 8,908 33,440 2015 113,666 12,601 11,445 2,377 2014 98,458 8,456 33,024 2013 91,948 7,894 30,283 2014 2013 110,212 102,870 11,754 10,922 10,899 10,104 2,058 2,039 Differential 2015 -3% -13% -9% -6% 2014 0% -7% -1% -2% 2013 0% 0% -1% 0% 2014 1 -3 -2 -4 Horizontal 2015 2014 2.65% 7.08% 5.35% 7.12% Vertical 2013 2015 2014 2013 302.23% 298.14% 303.63% 26.64% 25.61% 26.07% Horizontal 2015 2014 3.13% 7.14% 7.21% 7.62% 5.01% 7.87% 15.50% 0.93% Vertical 2013 2015 2014 2013 100.00% 100.00% 100.00% 11.09% 10.66% 10.62% 10.07% 9.89% 9.82% 2.09% 1.87% 1.98% Name Horizontal Consolidated Statements of Operations (USD $) 12 Months Ended In Millions Jan. 31, 2015 Feb. 01, 2014 $ 72,618 1.9% $ 71,279 -0.9% $ Sales 0 #DIV/0! 0 -100.0% Credit card revenues 72,618 1.9% 71,279 -2.8% Total revenues 51,278 2.5% 50,039 -1.0% Cost of sales (% is of Sales, not of Total Revenues) 14,676 1.5% 14,465 -1.2% Selling, general and administrative expenses 0 #DIV/0! 0 -100.0% Credit card expenses 2,129 6.7% 1,996 -2.3% Depreciation and amortization 0 -100.0% (391) 142.9% Gain on receivables transaction 4,535 -12.3% 5,170 -9.9% Earnings from continuing operations before interest expense and income taxes 882 -15.9% 1,049 53.4% Net interest expense 3,653 -11.4% 4,121 -18.5% Earnings from continuing operations before income taxes 1,204 -15.6% 1,427 -18.0% Provision for income taxes $ 2,449 -9.1% $ 2,694 -18.7% $ Net earnings from continuing operations Notes: (1) If your company does not report income from discontinued operations, you may omit the phrase "from continuing operations" in the above earnings captions. How much did sales change over the last year? What cause sales to go up or down? Not every factor that caused sales to change causes sales to go up, There were some offsetting facts. What are these offsetting factors? Perform this kind of analysis for the key items in operating income. No need to analyse depreciation and amortization, gains on receivable transaction, net interest etc. Primaraly interested in 3 components of operating income : sales, cost of sales and SG$A Analyse these 3 operating income: Example: What is included in SG$A? What parts of those expenses changes year to year? What is management doing to cause the SG&A to go up or down? Show how you calculated the ratios. Feb. 02, 2013 71,960 1,341 73,301 50,568 14,643 467 2,044 (161) 5,740 684 5,056 1,741 3,315 Name Vertical Consolidated Statements of Operations (USD $) Note: To facilitate comparison across years, "Sales" rather than "Total Revenues" are used in the denominator. 12 Months Ended In Millions Jan. 31, 2015 Feb. 01, 2014 $ 72,618 100.0% $ 71,279 100.0% $ Sales 0 0.0% 0 0.0% Credit card revenues 72,618 100.0% 71,279 100.0% Total revenues 51,278 70.6% 50,039 70.2% Cost of sales (% is of Sales, not of Total Revenues) 29.4% 29.8% Gross Profit % (Sales - COS)/Sales: 14,676 20.2% 14,465 20.3% Selling, general and administrative expenses 0 0.0% 0 0.0% Credit card expenses 2,129 2.9% 1,996 2.8% Depreciation and amortization 0 0.0% (391) -0.5% Gain on receivables transaction 4,535 6.2% 5,170 7.3% Earnings from continuing operations before interest expense and income taxes 882 1.2% 1,049 1.5% Net interest expense 3,653 5.0% 4,121 5.8% Earnings from continuing operations before income taxes 1,204 1.7% 1,427 2.0% Provision for income taxes $ 2,449 3.4% $ 2,694 3.8% $ Net earnings from continuing operations Feb. 02, 2013 71,960 100.0% 1,341 1.9% 73,301 101.9% 50,568 70.3% 29.7% 14,643 20.3% 467 0.6% 2,044 2.8% (161) -0.2% 5,740 8.0% 684 1.0% 5,056 7.0% 1,741 2.4% 3,315 4.6% Notes: (1) If your company does not report income from discontinued operations, you may omit the phrase "from continuing operations" in the above earnings captions. (2) For illustration purposes the Gross Profit % row was added to the normal income statement. Look at the cost of sales and determine if it went up or down from what it was in the previous year. What is contributing to the increase or decrease of cost of sales. (maybe this could be due to change in the cost of merchandise or a result of delining sales, etc) Include gross profit b/c it facilitates analysis. Speak to why the gross profit changed etc. Speak to why the SG&A declined/increased NOTE: use 1.2% 20.2% 70.6% NOT 70.65% 20.63% Compare across time: Time series analysis. Year over year changes is needed as well. Show how you calculated the ratios Costco Consolidated Statement of Income (amounts in Millions) ~ Page 40 ~ Income Statement August 30, 2015 REVENUE Net sales August 31, 2014 ### 113,666 3.13% 110,212 2,533 4.32% 2,428 6.21% 2,286 Total revenue 116,199 3.16% 112,640 7.12% 105,156 OPERATING EXPENSES Merchandise costs 101,065 2.65% 98,458 7.08% 91,948 11,445 5.01% 10,899 7.87% 10,104 65 3.17% 63 23.53% 51 3,624 12.55% 3,220 5.47% 3,053 -124 104 9.73% 15.56% -113 90 14.14% -7.22% -99 97 INCOME BEFORE INCOME TAXES 3,604 12.73% 3,197 4.79% 3,051 Provision for income taxes 1,195 7.75% 1,109 12.02% 990 Net income including noncontrolling interests 2,409 15.37% 2,088 1.31% 2,061 Net income attributable to noncontrolling interests NET INCOME ATTRIBUTABLE TO COSTCO -32 2,377 6.67% 15.50% -30 2,058 36.36% 0.93% -22 2,039 Membership fees Selling, general and administrative Preopening expenses Operating income OTHER INCOME (EXPENSE) Interest expense Interest income and other, net 7.14% 102,870 Costco Consolidated Statement of Income (amounts in Millions) ~ Page 40 ~ Income Statement August 30, 2015 REVENUE Net sales Membership fees August 31, 2014 ### 113,666 97.82% 110,212 97.84% 102,870 97.83% 2,533 2.18% 2,428 2.16% 2,286 2.17% Total revenue 116,199 100.00% OPERATING EXPENSES Merchandise costs 101,065 86.98% 98,458 87.41% 91,948 87.44% 11,445 9.85% 10,899 9.68% 10,104 9.61% 65 0.06% 63 0.06% 51 0.05% 3,624 3.12% 3,220 2.86% 3,053 2.90% -124 104 -0.11% 0.09% -113 90 -0.10% 0.08% -99 97 -0.09% 0.09% INCOME BEFORE INCOME TAXES 3,604 3.10% 3,197 2.84% 3,051 2.90% Provision for income taxes 1,195 1.03% 1,109 0.98% 990 0.94% Net income including noncontrolling interests 2,409 2.07% 2,088 1.85% 2,061 1.96% Net income attributable to noncontrolling interests NET INCOME ATTRIBUTABLE TO COSTCO -32 2,377 -0.03% 2.05% -30 2,058 -0.03% 1.83% -22 2,039 -0.02% 1.94% Selling, general and administrative Preopening expenses Operating income OTHER INCOME (EXPENSE) Interest expense Interest income and other, net 112,640 100.00% 105,156 100.00% Costco Consolidated Balance Sheet (amounts in Millions) ~ Page 39 ~ Balance Sheet August 30, 2015 CURRENT ASSETS Cash and cash equivalents Short-term investments Receivables, net Merchandise inventories Deferred income taxes and other current assets Total current assets PROPERTY AND EQUIPMENT Land Buildings and improvements Equipment and fixtures Contstruction in progress Less accumulated depreciation and amortization Net property and equipment OTHER ASSETS TOTAL ASSETS CURRENT LIABILITIES Accounts payable Current portion of long-term debt Accrued salaries and benefits Accrued member rewards Deferred membership fees Other current liabilities Total current liabilities LONG-TERM DEBT, excluding current portion DEFERRED INCOME TAXES AND OTHER LIABILITIES Total liabilities EQUITY Preferred stock Common stock Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total Costco stockholders' equity Noncontrolling interests Total equity TOTAL LIABILITIES AND EQUITY August 31, 2014 ### 4,801 1,618 1,224 8,908 -16.3% 2.6% 6.6% 5.3% 5,738 1,577 1,148 8,456 23.6% 6.6% -4.4% 7.1% 4,644 1,480 1,201 7,894 748 17,299 11.8% -1.6% 669 17,588 7.7% 11.0% 621 15,840 4,961 12,618 5,274 811 23,664 5.2% 0.8% 8.9% 37.0% 4.4% 4,716 12,522 4,845 592 22,675 7.0% 8.4% 8.3% 1.2% 7.9% 4,409 11,556 4,472 585 21,022 -8,263 15,401 5.3% 3.9% -7,845 14,830 9.9% 6.8% -7,141 13,881 740 33,440 22.1% 1.3% 606 33,024 7.8% 9.1% 562 30,283 9,011 1,283 2,468 813 1,269 6.1% #DIV/0! 10.6% 5.2% 1.2% 8,491 7.9% 0 -100.0% 2,231 214.2% 773 102.4% 1,254 7.5% 7,872 2,037 710 382 1,167 1,696 16,540 4,864 2.0% 14.8% -4.5% 1,663 14,412 5,093 52.7% 8.7% 1.9% 1,089 13,257 4,998 1,193 22,597 18.8% 10.2% 1,004 20,509 -1.2% 6.4% 1,016 19,271 0 NM 2 0.0% 5,218 6.1% -1,121 1375.0% 6,518 -12.6% 10,617 -13.7% 0 2 4,919 -76 7,458 12,303 NM 0.0% 5.3% -37.7% 18.7% 13.6% 0 2 4,670 -122 6,283 10,833 212 12,515 33,024 18.4% 13.6% 9.1% 179 11,012 30,283 226 10,843 33,440 6.6% -13.4% 1.3% Costco Consolidated Balance Sheet (amounts in Millions) ~ Page 39 ~ http://www. Pg. 35 Balance Sheet August 30, 2015 CURRENT ASSETS Cash and cash equivalents Short-term investments Receivables, net Merchandise inventories Deferred income taxes and other current assets Total current assets PROPERTY AND EQUIPMENT Land Buildings and improvements Equipment and fixtures Contstruction in progress Less accumulated depreciation and amortization Net property and equipment OTHER ASSETS TOTAL ASSETS CURRENT LIABILITIES Accounts payable Current portion of long-term debt Accrued salaries and benefits Accrued member rewards Deferred membership fees Other current liabilities Total current liabilities LONG-TERM DEBT, excluding current portion DEFERRED INCOME TAXES AND OTHER LIABILITIES Total liabilities EQUITY Preferred stock Common stock Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total Costco stockholders' equity Noncontrolling interests Total equity TOTAL LIABILITIES AND EQUITY August 31, 2014 ### 4,801 1,618 1,224 8,908 14.4% 4.8% 3.7% 26.6% 5,738 1,577 1,148 8,456 17.4% 4.8% 3.5% 25.6% 4,644 1,480 1,201 7,894 15.3% 4.9% 4.0% 26.1% 748 17,299 2.2% 51.7% 669 17,588 2.0% 53.3% 621 15,840 2.1% 52.3% 4,961 12,618 5,274 811 23,664 14.8% 37.7% 15.8% 2.4% 70.8% 4,716 12,522 4,845 592 22,675 14.3% 37.9% 14.7% 1.8% 68.7% 4,409 11,556 4,472 585 21,022 14.6% 38.2% 14.8% 1.9% 69.4% -8,263 15,401 -24.7% 46.1% -7,845 14,830 -23.8% 44.9% -7,141 13,881 -23.6% 45.8% 740 2.2% 33,440 100.0% 606 1.8% 33,024 100.0% 562 1.9% 30,283 100.0% 9,011 1,283 2,468 813 1,269 26.9% 3.8% 7.4% 2.4% 3.8% 8,491 0 2,231 773 1,254 25.7% 0.0% 6.8% 2.3% 3.8% 7,872 2,037 710 382 1,167 26.0% 6.7% 2.3% 1.3% 3.9% 1,696 16,540 4,864 5.1% 49.5% 14.5% 1,663 14,412 5,093 5.0% 43.6% 15.4% 1,089 13,257 4,998 3.6% 43.8% 16.5% 1,193 22,597 3.6% 67.6% 1,004 20,509 3.0% 62.1% 1,016 19,271 3.4% 63.6% 0 2 5,218 -1,121 6,518 10,617 0.0% 0.0% 15.6% -3.4% 19.5% 31.7% 0 2 4,919 -76 7,458 12,303 0.0% 0.0% 14.9% -0.2% 22.6% 37.3% 0 2 4,670 -122 6,283 10,833 0.0% 0.0% 15.4% -0.4% 20.7% 35.8% 226 0.7% 10,843 32.4% 33,440 100.0% 212 0.6% 12,515 37.9% 33,024 100.0% 179 0.6% 11,012 36.4% 30,283 100.0% w.sec.gov/Archives/edgar/data/909832/000090983214000021/cost10k2014.htm Industry Ratios Not sure where to source from. As far as I know you need a paid subscription Segment breakdown (dollars in billions) United States Canada Other International Total Segment breakdown (dollars in billions) United States Canada Other International Total Segment breakdown (dollars in billions) United States Canada Other International Total Segment breakdown (dollars in billions) U.S. Canada Other International Total Company Total Revenue Share in Revenue 2015 2014 2013 2015 2014 2013 84,351 80,477 75,493 72.59% 71.45% 73.90% 17,341 17,943 14,179 14.92% 15.93% 13.88% 14,507 14,220 12,484 12.48% 12.62% 12.22% 116,199 112,640 102,156 100.00% 100.00% 100.00% Total Revenue 2015 2014 2013 84,351 80,477 75,493 17,341 17,943 14,179 14,507 14,220 12,484 116,199 112,640 102,156 Cost of Sales Inventory Total Assets Key Items - Annual report 2015 Net revenues Gross profit SG&A expenses Net Income Operating Margin 2015 2014 2013 2.74% 2.34% 2.40% 4.45% 4.44% 5.33% 3.76% 3.83% 3.90% 3.12% 2.86% 2.99% Total Operating Income Share in Operating Inc. 2015 2014 2013 2015 2014 2013 2,308 1,880 1,810 63.69% 58.39% 59.29% 771 796 756 21.27% 24.72% 24.76% 545 544 487 15.04% 16.89% 15.95% 3,624 3,220 3,053 100.00% 100.00% 100.00% Increase in comparable warehouse sales excluding Increase in comparable impact of changes in warehouse sales foreign currency and gasoline 2015 2014 2013 2015 2014 2013 3% 5% 6% 6% 5% 6% -5% 2% 9% 8% 9% 9% -3% 3% 1% 6% 4% 2% 1% 4% 6% 7% 6% 6% Change in SG&A as a percent of sales: In BPS (basis points) Positive impact of lower warehouse operating costs Higher central operating costs Higher stock compensation expense Impact excluding lower gasoline prices Cost of Sales and Inventory Total Operating Income 2015 2014 2013 2,308 1,880 1,810 771 796 756 545 544 487 3,624 3,220 3,053 2015 16 -5 -4 7 2015 101,065 8,908 33,440 2015 113,666 12,601 11,445 2,377 2014 98,458 8,456 33,024 2013 91,948 7,894 30,283 2014 2013 110,212 102,870 11,754 10,922 10,899 10,104 2,058 2,039 Differential 2015 -3% -13% -9% -6% 2014 0% -7% -1% -2% 2013 0% 0% -1% 0% 2014 1 -3 -2 -4 Horizontal 2015 2014 2.65% 7.08% 5.35% 7.12% Vertical 2013 2015 2014 2013 302.23% 298.14% 303.63% 26.64% 25.61% 26.07% Horizontal 2015 2014 3.13% 7.14% 7.21% 7.62% 5.01% 7.87% 15.50% 0.93% Vertical 2013 2015 2014 2013 100.00% 100.00% 100.00% 11.09% 10.66% 10.62% 10.07% 9.89% 9.82% 2.09% 1.87% 1.98% Name Horizontal Consolidated Statements of Operations (USD $) 12 Months Ended In Millions Jan. 31, 2015 Feb. 01, 2014 $ 72,618 1.9% $ 71,279 -0.9% $ Sales 0 #DIV/0! 0 -100.0% Credit card revenues 72,618 1.9% 71,279 -2.8% Total revenues 51,278 2.5% 50,039 -1.0% Cost of sales (% is of Sales, not of Total Revenues) 14,676 1.5% 14,465 -1.2% Selling, general and administrative expenses 0 #DIV/0! 0 -100.0% Credit card expenses 2,129 6.7% 1,996 -2.3% Depreciation and amortization 0 -100.0% (391) 142.9% Gain on receivables transaction 4,535 -12.3% 5,170 -9.9% Earnings from continuing operations before interest expense and income taxes 882 -15.9% 1,049 53.4% Net interest expense 3,653 -11.4% 4,121 -18.5% Earnings from continuing operations before income taxes 1,204 -15.6% 1,427 -18.0% Provision for income taxes $ 2,449 -9.1% $ 2,694 -18.7% $ Net earnings from continuing operations Notes: (1) If your company does not report income from discontinued operations, you may omit the phrase "from continuing operations" in the above earnings captions. How much did sales change over the last year? What cause sales to go up or down? Not every factor that caused sales to change causes sales to go up, There were some offsetting facts. What are these offsetting factors? Perform this kind of analysis for the key items in operating income. No need to analyse depreciation and amortization, gains on receivable transaction, net interest etc. Primaraly interested in 3 components of operating income : sales, cost of sales and SG$A Analyse these 3 operating income: Example: What is included in SG$A? What parts of those expenses changes year to year? What is management doing to cause the SG&A to go up or down? Show how you calculated the ratios. Feb. 02, 2013 71,960 1,341 73,301 50,568 14,643 467 2,044 (161) 5,740 684 5,056 1,741 3,315 Name Vertical Consolidated Statements of Operations (USD $) Note: To facilitate comparison across years, "Sales" rather than "Total Revenues" are used in the denominator. 12 Months Ended In Millions Jan. 31, 2015 Feb. 01, 2014 $ 72,618 100.0% $ 71,279 100.0% $ Sales 0 0.0% 0 0.0% Credit card revenues 72,618 100.0% 71,279 100.0% Total revenues 51,278 70.6% 50,039 70.2% Cost of sales (% is of Sales, not of Total Revenues) 29.4% 29.8% Gross Profit % (Sales - COS)/Sales: 14,676 20.2% 14,465 20.3% Selling, general and administrative expenses 0 0.0% 0 0.0% Credit card expenses 2,129 2.9% 1,996 2.8% Depreciation and amortization 0 0.0% (391) -0.5% Gain on receivables transaction 4,535 6.2% 5,170 7.3% Earnings from continuing operations before interest expense and income taxes 882 1.2% 1,049 1.5% Net interest expense 3,653 5.0% 4,121 5.8% Earnings from continuing operations before income taxes 1,204 1.7% 1,427 2.0% Provision for income taxes $ 2,449 3.4% $ 2,694 3.8% $ Net earnings from continuing operations Feb. 02, 2013 71,960 100.0% 1,341 1.9% 73,301 101.9% 50,568 70.3% 29.7% 14,643 20.3% 467 0.6% 2,044 2.8% (161) -0.2% 5,740 8.0% 684 1.0% 5,056 7.0% 1,741 2.4% 3,315 4.6% Notes: (1) If your company does not report income from discontinued operations, you may omit the phrase "from continuing operations" in the above earnings captions. (2) For illustration purposes the Gross Profit % row was added to the normal income statement. Look at the cost of sales and determine if it went up or down from what it was in the previous year. What is contributing to the increase or decrease of cost of sales. (maybe this could be due to change in the cost of merchandise or a result of delining sales, etc) Include gross profit b/c it facilitates analysis. Speak to why the gross profit changed etc. Speak to why the SG&A declined/increased NOTE: use 1.2% 20.2% 70.6% NOT 70.65% 20.63% Compare across time: Time series analysis. Year over year changes is needed as well. Show how you calculated the ratios Costco Consolidated Statement of Income (amounts in Millions) ~ Page 40 ~ Income Statement August 30, 2015 REVENUE Net sales August 31, 2014 ### 113,666 3.13% 110,212 2,533 4.32% 2,428 6.21% 2,286 Total revenue 116,199 3.16% 112,640 7.12% 105,156 OPERATING EXPENSES Merchandise costs 101,065 2.65% 98,458 7.08% 91,948 11,445 5.01% 10,899 7.87% 10,104 65 3.17% 63 23.53% 51 3,624 12.55% 3,220 5.47% 3,053 -124 104 9.73% 15.56% -113 90 14.14% -7.22% -99 97 INCOME BEFORE INCOME TAXES 3,604 12.73% 3,197 4.79% 3,051 Provision for income taxes 1,195 7.75% 1,109 12.02% 990 Net income including noncontrolling interests 2,409 15.37% 2,088 1.31% 2,061 Net income attributable to noncontrolling interests NET INCOME ATTRIBUTABLE TO COSTCO -32 2,377 6.67% 15.50% -30 2,058 36.36% 0.93% -22 2,039 Membership fees Selling, general and administrative Preopening expenses Operating income OTHER INCOME (EXPENSE) Interest expense Interest income and other, net 7.14% 102,870 Q1 Answer How much did sales change over the last year? 3.13% Q2 Answer What cause sales to go up or down? Not every factor that caused sales to change causes sales to go up, There were some offsetting facts. What are these offsetting fact Reason for sales to go up are: 1.) 1% increase in comparable warehouse sales Pg 21 10 K 2014 2.) Sales at new warehouses opened in 2014 and 2015 Pg 21 10 K 2014 Offsetting facts 1.) Changes in foreign currencies relative to the U.S. dollar negatively impacted net sal Pg 21 2.) Changes in gasoline prices negatively impacted net sales Pg 21 Q3 Answer 10 K 2014 10 K 2014 Key items in operating income Gross profit Reasons for going up 1.) Increase in gross margin of combined core merchandise categories 2.) impact of gasoline price deflation on net sales 3.) an increase in our warehouse ancillary and other business gross margin 4.) Lifo benefit Pg Pg Pg Pg 10 10 10 10 Reasons for going down 1.) decrease in fresh foods 2.) negative contribution from core merchandise categories 3.) Changes in foreign currencies relative to the U.S. dollar Pg 23 Pg 23 Pg 23 10 K 2014 10 K 2014 10 K 2014 SG&A Reasons for going up 1.) negative impact of gasoline price deflation on net sales 2.) higher central operating costs 3.) Higher stock compensation expense Pg 24 Pg 24 Pg 24 10 K 2014 10 K 2014 10 K 2014 Reasons for going down 1.) Lower warehouse operating costs 2.) Improvements in payroll expenses in our core busines 3.) Changes in foreign currencies Pg 24 Pg 24 Pg 24 10 K 2014 10 K 2014 10 K 2014 23 23 23 23 K K K K 2014 2014 2014 2014 tors? Costco Consolidated Statement of Income (amounts in Millions) ~ Page 40 ~ Income Statement August 30, 2015 REVENUE Net sales Membership fees 113,666 100.00% 2,533 2.23% August 31, 2014 110,212 100.00% 2,428 2.20% 102,870 100.00% 2,286 2.22% Total revenue 116,199 102.23% OPERATING EXPENSES Merchandise costs (cost of sales) 101,065 88.91% 98,458 89.34% 91,948 89.38% Gross profit 12,601 11.1% 11,754 10.7% 10,922 10.6% Selling, general and administrative 11,445 10.07% 10,899 9.89% 10,104 9.82% 65 0.06% 63 0.06% 51 0.05% 3,624 3.19% 3,220 2.92% 3,053 2.97% -124 104 -0.11% 0.09% -113 90 -0.10% 0.08% -99 97 -0.10% 0.09% INCOME BEFORE INCOME TAXES 3,604 3.17% 3,197 2.90% 3,051 2.97% Provision for income taxes 1,195 1.05% 1,109 1.01% 990 0.96% Net income including noncontrolling interests 2,409 2.12% 2,088 1.89% 2,061 2.00% Net income attributable to noncontrolling interests NET INCOME ATTRIBUTABLE TO COSTCO -32 2,377 -0.03% 2.09% -30 2,058 -0.03% 1.87% -22 2,039 -0.02% 1.98% Preopening expenses Operating income OTHER INCOME (EXPENSE) Interest expense Interest income and other, net 112,640 102.20% ### 105,156 102.22% Costco Consolidated Balance Sheet (amounts in Millions) ~ Page 39 ~ Balance Sheet August 30, 2015 CURRENT ASSETS Cash and cash equivalents Short-term investments Receivables, net Merchandise inventories Deferred income taxes and other current assets Total current assets PROPERTY AND EQUIPMENT Land Buildings and improvements Equipment and fixtures Contstruction in progress Less accumulated depreciation and amortization Net property and equipment OTHER ASSETS TOTAL ASSETS CURRENT LIABILITIES Accounts payable Current portion of long-term debt Accrued salaries and benefits Accrued member rewards Deferred membership fees Other current liabilities Total current liabilities LONG-TERM DEBT, excluding current portion DEFERRED INCOME TAXES AND OTHER LIABILITIES Total liabilities EQUITY Preferred stock Common stock Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total Costco stockholders' equity Noncontrolling interests Total equity TOTAL LIABILITIES AND EQUITY August 31, 2014 ### 4,801 1,618 1,224 8,908 -16.3% 2.6% 6.6% 5.3% 5,738 1,577 1,148 8,456 23.6% 6.6% -4.4% 7.1% 4,644 1,480 1,201 7,894 748 17,299 11.8% -1.6% 669 17,588 7.7% 11.0% 621 15,840 4,961 12,618 5,274 811 23,664 5.2% 0.8% 8.9% 37.0% 4.4% 4,716 12,522 4,845 592 22,675 7.0% 8.4% 8.3% 1.2% 7.9% 4,409 11,556 4,472 585 21,022 -8,263 15,401 5.3% 3.9% -7,845 14,830 9.9% 6.8% -7,141 13,881 740 33,440 22.1% 1.3% 606 33,024 7.8% 9.1% 562 30,283 9,011 1,283 2,468 813 1,269 6.1% #DIV/0! 10.6% 5.2% 1.2% 8,491 7.9% 0 -100.0% 2,231 214.2% 773 102.4% 1,254 7.5% 7,872 2,037 710 382 1,167 1,696 16,540 4,864 2.0% 14.8% -4.5% 1,663 14,412 5,093 52.7% 8.7% 1.9% 1,089 13,257 4,998 1,193 22,597 18.8% 10.2% 1,004 20,509 -1.2% 6.4% 1,016 19,271 0 NM 2 0.0% 5,218 6.1% -1,121 1375.0% 6,518 -12.6% 10,617 -13.7% 0 2 4,919 -76 7,458 12,303 NM 0.0% 5.3% -37.7% 18.7% 13.6% 0 2 4,670 -122 6,283 10,833 212 12,515 33,024 18.4% 13.6% 9.1% 179 11,012 30,283 226 10,843 33,440 6.6% -13.4% 1.3% Formulas Ratios Profitability 1. Return on Equity 2. Return on Assets 3.) Gross Margin 4.) Net Margin 22.2% 7.2% 11.1% 2.09% 16.7% 6.3% 10.7% 1.87% 18.7% 6.8% 10.6% 1.98% Net Income/Total equity Net Income/Total assets Net Income/Net Sales Net Income/Net Sales Liquidity 1.) Current ratio 2.) Acid test ratio 3.) Times interest earned 1.05 0.51 29.23 1.22 0.63 28.50 1.19 0.60 30.84 Current assets/current liabilities (Current assets-inventory)/current liabilities Operating income/Total interest expense 0.68 0.57 0.62 0.41 0.64 0.64 Solvency ratio 1.) Financial Leverage 2.) Debt to Equity ratio Total Liabilities/Total assets Total Debt/Total Equity Costco Consolidated Balance Sheet (amounts in Millions) ~ Page 39 ~ http://www. Pg. 35 Balance Sheet August 30, 2015 CURRENT ASSETS Cash and cash equivalents Short-term investments Receivables, net Merchandise inventories Deferred income taxes and other current assets Total current assets PROPERTY AND EQUIPMENT Land Buildings and improvements Equipment and fixtures Contstruction in progress Less accumulated depreciation and amortization Net property and equipment OTHER ASSETS TOTAL ASSETS CURRENT LIABILITIES Accounts payable Current portion of long-term debt Accrued salaries and benefits Accrued member rewards Deferred membership fees Other current liabilities Total current liabilities LONG-TERM DEBT, excluding current portion DEFERRED INCOME TAXES AND OTHER LIABILITIES Total liabilities EQUITY Preferred stock Common stock Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total Costco stockholders' equity Noncontrolling interests Total equity TOTAL LIABILITIES AND EQUITY August 31, 2014 ### 4,801 1,618 1,224 8,908 14.4% 4.8% 3.7% 26.6% 5,738 1,577 1,148 8,456 17.4% 4.8% 3.5% 25.6% 4,644 1,480 1,201 7,894 15.3% 4.9% 4.0% 26.1% 748 17,299 2.2% 51.7% 669 17,588 2.0% 53.3% 621 15,840 2.1% 52.3% 4,961 12,618 5,274 811 23,664 14.8% 37.7% 15.8% 2.4% 70.8% 4,716 12,522 4,845 592 22,675 14.3% 37.9% 14.7% 1.8% 68.7% 4,409 11,556 4,472 585 21,022 14.6% 38.2% 14.8% 1.9% 69.4% -8,263 15,401 -24.7% 46.1% -7,845 14,830 -23.8% 44.9% -7,141 13,881 -23.6% 45.8% 740 2.2% 33,440 100.0% 606 1.8% 33,024 100.0% 562 1.9% 30,283 100.0% 9,011 1,283 2,468 813 1,269 26.9% 3.8% 7.4% 2.4% 3.8% 8,491 0 2,231 773 1,254 25.7% 0.0% 6.8% 2.3% 3.8% 7,872 2,037 710 382 1,167 26.0% 6.7% 2.3% 1.3% 3.9% 1,696 16,540 4,864 5.1% 49.5% 14.5% 1,663 14,412 5,093 5.0% 43.6% 15.4% 1,089 13,257 4,998 3.6% 43.8% 16.5% 1,193 22,597 3.6% 67.6% 1,004 20,509 3.0% 62.1% 1,016 19,271 3.4% 63.6% 0 2 5,218 -1,121 6,518 10,617 0.0% 0.0% 15.6% -3.4% 19.5% 31.7% 0 2 4,919 -76 7,458 12,303 0.0% 0.0% 14.9% -0.2% 22.6% 37.3% 0 2 4,670 -122 6,283 10,833 0.0% 0.0% 15.4% -0.4% 20.7% 35.8% 226 0.7% 10,843 32.4% 33,440 100.0% 212 0.6% 12,515 37.9% 33,024 100.0% 179 0.6% 11,012 36.4% 30,283 100.0% w.sec.gov/Archives/edgar/data/909832/000090983214000021/cost10k2014.htm Industry Ratios Not sure where to source from. As far as I know you need a paid subscription Segment breakdown (dollars in billions) United States Canada Other International Total Segment breakdown (dollars in billions) United States Canada Other International Total Segment breakdown (dollars in billions) United States Canada Other International Total Segment breakdown (dollars in billions) U.S. Canada Other International Total Company Total Revenue Share in Revenue 2015 2014 2013 2015 2014 2013 84,351 80,477 75,493 72.59% 71.45% 73.90% 17,341 17,943 14,179 14.92% 15.93% 13.88% 14,507 14,220 12,484 12.48% 12.62% 12.22% 116,199 112,640 102,156 100.00% 100.00% 100.00% Total Revenue 2015 2014 2013 84,351 80,477 75,493 17,341 17,943 14,179 14,507 14,220 12,484 116,199 112,640 102,156 Cost of Sales Inventory Total Assets Key Items - Annual report 2015 Net revenues Gross profit SG&A expenses Net Income Operating Margin 2015 2014 2013 2.74% 2.34% 2.40% 4.45% 4.44% 5.33% 3.76% 3.83% 3.90% 3.12% 2.86% 2.99% Total Operating Income Share in Operating Inc. 2015 2014 2013 2015 2014 2013 2,308 1,880 1,810 63.69% 58.39% 59.29% 771 796 756 21.27% 24.72% 24.76% 545 544 487 15.04% 16.89% 15.95% 3,624 3,220 3,053 100.00% 100.00% 100.00% Increase in comparable warehouse sales excluding Increase in comparable impact of changes in warehouse sales foreign currency and gasoline 2015 2014 2013 2015 2014 2013 3% 5% 6% 6% 5% 6% -5% 2% 9% 8% 9% 9% -3% 3% 1% 6% 4% 2% 1% 4% 6% 7% 6% 6% Change in SG&A as a percent of sales: In BPS (basis points) Positive impact of lower warehouse operating costs Higher central operating costs Higher stock compensation expense Impact excluding lower gasoline prices Cost of Sales and Inventory Total Operating Income 2015 2014 2013 2,308 1,880 1,810 771 796 756 545 544 487 3,624 3,220 3,053 2015 16 -5 -4 7 2015 101,065 8,908 33,440 2015 113,666 12,601 11,445 2,377 2014 98,458 8,456 33,024 2013 91,948 7,894 30,283 2014 2013 110,212 102,870 11,754 10,922 10,899 10,104 2,058 2,039 Differential 2015 -3% -13% -9% -6% 2014 0% -7% -1% -2% 2013 0% 0% -1% 0% 2014 1 -3 -2 -4 Horizontal 2015 2014 2.65% 7.08% 5.35% 7.12% Vertical 2013 2015 2014 2013 302.23% 298.14% 303.63% 26.64% 25.61% 26.07% Horizontal 2015 2014 3.13% 7.14% 7.21% 7.62% 5.01% 7.87% 15.50% 0.93% Vertical 2013 2015 2014 2013 100.00% 100.00% 100.00% 11.09% 10.66% 10.62% 10.07% 9.89% 9.82% 2.09% 1.87% 1.98%
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