Financial analysis is the mean to clarify most important factors that affected Costco performance and resulted in companies’ success. In order to reach that goal, we studied financial performance of Costco for 2008 to 2012. These data obtained from different sources such as Costco annual reports and other respectable financial sources.
At some levels comparison between leading companies in the industry such as Sam’s club and Bj’s has been made. The major problem that we faced during that process was that Sam’s club considered as subsidiary of Wall mart, which made comparison less sensitive.
By using financial statement, we calculated different financial ratios for liquidity, debt ratios and other significant in order to see the performance of Costco more clearly. We also performed DuPont analysis and identified return on asset and return on equity to get more details regarding the performance of Costco.
Another step was to study the cash movement and the investment decisions that made during these five years and study the effects of those decisions. At the end, with the information collected, we studied the stock movements and the attractiveness of Costco’s stock for the investors.
Balance sheet statement for Costco in last five years (2008-2012) shown in figure 1. By looking at the balance sheet, we can see that the business had a steady growth in last few years. Even during the financial crises, they didn’t suffer that much and were able to maintain their performance. Another very interesting point is decrease of cash in 2012, when the company decided to buy the warehouses instead of renting them.
Costco had grown and expanded during last five years and they were able to maintain the success in new locations as well. By looking at construction section in balance sheet, the decrease in construction in 2009 is justified as financial crises just passed and all the companies were concerned with their expansion