Using the financial ratios provided in the Appendix and the financial statement information for Costco Wholesale Corporation, Inc., below, calculate the following ratios for Costco for both 2013 and 2014.
1. Gross profit margin
2. Operating profit margin
3. Net profit margin
4. Times interest earned coverage
5. Page 85 Return on shareholders' equity
6. Return on assets
7. Debt-to-equity ratio
8. Days of inventory
9. Inventory turnover ratio
10. Average collection period
Based on these ratios, did Costco's financial performance improve, weaken, or remain about the same from 2013 to 2014?
Consolidated Statements of Income for Costco Wholesale Corporation, Inc., 2013-2014 (in millions, except per share data)
|
2014
|
2013
|
|
Net sales
|
$110,212
|
$102,870
|
|
Membership fees
|
2,428
|
2,286
|
|
Total revenue
|
112,640
|
105,156
|
|
Operating Expenses
|
|
|
|
Merchandise costs
|
98,458
|
91,948
|
|
Selling, general and administrative
|
10,899
|
10,104
|
|
Operating income
|
3,220
|
3,053
|
|
Other Income (Expense)
|
|
|
|
Interest expense
|
(113)
|
(99)
|
|
Interest income and other, net
|
90
|
97
|
|
Income before income taxes
|
3,197
|
3,051
|
|
Provision for income taxes
|
1,109
|
990
|
|
Net income including noncontrolling interests
|
2,088
|
2,061
|
|
Net income attributable to noncontrolling interests
|
(30)
|
(22)
|
|
Net income
|
$2,058
|
$2,039
|
|
Basic earnings per share
|
$ 4.69
|
$ 4.68
|
|
Diluted earnings per share
|
$ 4.65
|
$ 4.63
|
Consolidated Balance Sheets for Costco Wholesale Corporation, 2013-2014 (in millions, except per share data)
|
ASSETS
|
AUGUST 31, 2014
|
SEPTEMBER 1, 2014
|
|
Current Assets
|
|
|
|
Cash and cash equivalents
|
$ 5,738
|
$ 4,644
|
|
Short-term investments
|
1,577
|
1,480
|
|
Receivables, net
|
1,148
|
1,201
|
|
Merchandise inventories
|
8,456
|
7,894
|
|
Deferred income taxes and other current assets
|
669
|
621
|
|
Total current assets
|
17,588
|
15,7840
|
|
Property and Equipment
|
|
|
|
Land
|
4,716
|
4,409
|
|
Buildings and improvements
|
12,522
|
11,556
|
|
Equipment and fixtures
|
4,845
|
4,472
|
|
Construction in progress
|
592
|
585
|
|
Less accumulated depreciation and amortization
|
(7,845)
|
(7,141)
|
|
Net property and equipment
|
14,830
|
13,881
|
|
Other assets
|
606
|
562
|
|
Total assets
|
$ 33,024
|
$ 30,283
|
|
Liabilities and Equity
|
|
|
|
Current Liabilities
|
|
|
|
Accounts payable
|
$8,491
|
$7,872
|
|
Accrued salaries and benefits
|
2,231
|
2,037
|
|
Accrued member rewards
|
773
|
710
|
|
Accrued sales and other taxes
|
442
|
382
|
|
Deferred membership fees
|
1,254
|
1,167
|
|
Other current liabilities
|
1,221
|
1,089
|
|
Total current liabilities
|
14,412
|
13,257
|
|
Long-term debt
|
5,093
|
4,998
|
|
Deferred income taxes and other liabilities
|
1,004
|
1,016
|
|
Total liabilities
|
20,509
|
19,271
|
|
Equity
|
|
|
|
Preferred stock $.005 par value; 100,000,000 shares authorized; no shares issued and outstanding
|
0
|
0
|
|
Common stock $.005 par value; 900,000,000 shares authorized; 437,683,000 and 436,839,000 shares issued and outstanding
|
2
|
2
|
|
Additional paid-in capital
|
4,919
|
4,670
|
|
Accumulated other comprehensive loss
|
(76)
|
(122)
|
|
Retained earnings
|
7,458
|
6,283
|
|
Total Costco stockholders' equity
|
12,303
|
10,833
|
|
Noncontrolling interests
|
212
|
179
|
|
Total equity
|
12,515
|
11,012
|
|
Total liabilities and equity
|
$ 33,024
|
$30,283
|
Source: Costco Wholesale Corporation, 2014 10-K.