Costco

In: Business and Management

Submitted By tolgamn
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COSTCO WHOLESALE CORPORATION FINANCIAL STATEMENT ANALYSIS

The important thing for stockholders is to review their investments on regular basis. So Margarita Torres wants to reconsider her analysis determine If Costco was still operating efficiently.
There are some reasons why Torres should keep her investment and should continue to maintain her investment in Costco. * Year over year, Costco Wholesale Corporation has been able to grow revenues from $71.4B to $77.9B. The company has been able to reduce the percentage of sales devoted to selling, general and administrative costs from 10.21% to 10.09%. This was a driver that led to a bottom line growth from $1.1B to $1.3B. Costco provides high sustainable growth through high return on equity and reinvestment on earnings. * Costco has operating efficiency . They provide that with high return on assets, high inventory turnover and lower operating expenses than competitors. * Costco has high value creation.
There are some reasons why Torres should reconsider her investment and should not continue to maintain her investment in Costco. * Costco has approximately 1 on debit/equity ratio. This can result volatile earnings as a result of the additional interest expense . * Costco has low market matrix
In conclusions, Torres should continue to support her investment in Costco. Due to maintaining low margins by selling items in bulk, keeping operating expenses to a minimum, and turning inventory over rapidly, it appears that Costco maintains a great deal of forward momentum she also could go for portfolio diversification in an area other than retail market.

SOURCES * http://finapps.forbes.com/finapps/jsp/finance/compinfo/Ratios.jsp?tkr=cost *…...

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