Costco WholesaleCorporation is a multinational membership warehouse club with 741 stores in ten countries. Established in Seattle Washington over 30 years ago, Costco has grown tobecome the second largest global retailer after Walmart. Since its inception, Costco has maintained astrong stock price and financials even during times of economic downturn. This report will summarize Costco’s financialperformance over the past 5 years including some financial statement and ratioanalysis, corporate risk factors, discuss critical accounting policies, and currentlegal proceedings the company is involved in using its 10k report.
A 10k, is a detailedannual report summarizing a company’s financial performance which all U.S.based corporations must file within 60 days of the end of its fiscal year withthe Securities and Exchange Commission. It provides a thorough breakdown of a company’s financial statements, givesinvestor information, and discusses future corporate goals and visions.
10k reports are of one of the mostsignificant and financially plausible document a company files. We will review some selected financialresults from the analysis done. Horizontal Analysis Horizontal Analysis, also referred to astrend analysis, shows the changes in a company’s financial data over a givenperiod of time. Thedata displays the difference in totals during a period and the percent ofchange (increase or decrease). Costco’sIncome Statement from 2013 to 2017 was used to conduct the about analysis. Refer to Exhibit 1 Net sales increased by almost 9% in 2017to $126,172.
This increase was relatedto the opening of 26 warehouse stores, 13 in the United States and 13internationally. Revenue from membershipfees increased to $2,853 (8%) due to increased annual fee premiums, newmembership sign-up at new stores and customer upgrades to executive membershipsat existing stores. There was anincrease in net income by 14% to $2,679 which was the lowest annual increaseover the past five years. Changes in netsales over the five-year period are mainly attributable to the amount of storesthe company opens annually. Netincreases and decreases in revenue and net income during the selected periodhave been based on some external economic factors such as increases in fuelprices, foreign currency exchange rates.