Term Essay

3715 words - 15 pages

Overview
Margarita Torres
Costco member and shareholder
Evaluating Costco’s financial performance
Evaluation methods
Common-size statements
Sustainable growth model
Benchmarking ratios
Retail Industry
$1.6 trillion in retail and wholesale trade (2001)
15% of GDP (1960)
16% of GDP (2001)
Department stores
Customer service premium
Many SKUs
Discount stores
Low prices
No frills
Retail Industry
Wholesale clubs
Membership only
Volume discounts
Limited SKUs
Online stores
Convenience
Low overhead
Sears, Roebuck, & Company
Founded 1893
First retail store opened in 1925
$41 billion in sales (2001)
2,185 stores
Wal-Mart / SAM’S Club
Founded 1962
First SAM’S Club opened in 1983
$218 billion in sales ...view middle of the document...

0%
Financial leverage
=2.04

Industry Comparison
Industry Comparison
Turnover and Margins
Net income margin
Dollars in profit per dollar in sales
Asset turnover
Dollars in sales per dollar in assets
Turnover and Margins
Net income margin
= 1.73%
Asset turnover
=4.03

Industry Comparison
Industry Comparison
Pretax Income and Tax Effect
Pretax return on sales
Return before taxes
Tax effect
Tax efficiency vs. operating efficiency
Pretax Income and Tax Effect
Pretax return on sales
= 2.88%
Tax effect
60.0%

Industry Comparison
Industry Comparison
Benchmarking Ratios
Gross margin
Mark up
Operating margin
Profit margin after operating expenses
Benchmarking Ratios
Gross margin
= 10.4%
Operating margin
= 2.85%

Industry Comparison
Industry Comparison
Benchmarking Ratios
Net margin
Profitability after accounting for all operations
Current ratio
Short-term liquidity
Efficient or inefficient use of capital
Benchmarking Ratios
Net margin
= 1.73%
Current ratio
= 0.94

Industry Comparison
Industry Comparison
Benchmarking Ratios
Inventory turns
Speed of inventory movement
Average rec. period
Time to collect from customers
Average payables period
Time to pay vendors
Benchmarking Ratios
Inventory turns
= 11.7
Average receivables period
= 3
Average payables period
= 33

Industry Comparison
Industry Comparison
Industry Comparison
Conclusion
Factors for growth
High sustainable growth
High return on equity
Reinvestment of earnings
Operating efficiency
High return on assets
High inventory turnover
Lower operating expenses than competitors
Possible increase in tax efficiency
Conclusion
Financing of growth
No dividend
Increase in current liabilities
Decrease in liquidity
Capital structure
Debit/equity ratio of approximately 1
Moderate financial leverage
Final analysis
Keep the stock
Consider Wal-Mart too

Latest Full Context Quarter Ending Date
2010/11

Gross Profit Margin
13.8%

EBIT Margin
2.8%

EBITDA Margin
3.7%

Pre-Tax Profit Margin
2.7%

Interest Coverage
19.6

Current Ratio
1.2

Quick Ratio
0.5

Leverage Ratio
2.3

Receivables Turnover
87.1

Inventory Turnover
10.5

Asset Turnover
3.2

Revenue to Assets
3.1

ROE from Total Operations
12.0%

Return on Invested Capital
10.1%

Return on Assets
5.2%

Debt/Common Equity Ratio
0.19

Price/Book Ratio (Price/Equity)
2.89

Book Value per Share
$25.65

Total Debt/ Equity
0.19

Long-Term Debt to Total Capital
0.16

SG&A as % of Revenue
10.1%

R&D as % of Revenue
0.0%

Receivables per Day Sales
$4.44

Days CGS in Inventory
34

Working Capital per Share
$4.71

Cash per Share
$8.57

Cash Flow per Share
$4.93

Free Cash Flow per Share
$3.10

Tangible Book Value per Share
$25.65

Price/Cash Flow Ratio
15.0

Price/Free Cash Flow Ratio
23.9

Price/Tangible Book Ratio
2.89

Most recent data

5-Year Averages
Return on Equity
12.3%

Return on Assets
5.7%

Return on Invested Capital
10.3%

Gross Profit Margin
13.5%

Pre-Tax Profit Margin
2.7%

Post-Tax Profit Margin
1.7%

Net Profit Margin (Total Operations)
1.7%

R&D as a % of...

Other Papers Like Term

Term Paper

1522 words - 7 pages compensation includes long-term incentives, short-term incentives, and merit costs of living. Before a company starts developing its compensation system, it needs to establish a reward strategy. This is a mix of rewards both extrinsic and intrinsic, that the organizations intend to provide. It is the blue print for creating the reward system. Compensation system has 3 main components: 1) Base pay – the foundation pay component for most

Term Paper

996 words - 4 pages process and resulting rules to be valid. An agency that seeks public comment for the purposes of drafting regulations cannot then turn the proposed regulations into agency rules after the comment period. The promulgated rules must be the result of the proceedings. Forth for challenging a regulation is that the regulation is unconstitutional. Another theory for challenging a regulation in court is ultra vires, a Latin term meaning “beyond its

Term Paper

698 words - 3 pages |COURSE: ___________________ Term Paper Writing Marking Rubric | | | | | | | | | |Name: __________________ |Assignment: ___________ Grade

Term Paper - 2390 words

2390 words - 10 pages this product is exactly what the industry needs as it is very original. It is exactly what is lacking in the industry and my intention is to create an industry standard that companies can follow. Short term goals of this product will include an increase in client satisfaction and lowered costs of doing business. The long term goals will include increasing the wealth of the business that purchases this product and becoming an industry innovator

Term Paper - 7155 words

7155 words - 29 pages 11/3/2008 FIN720 | Baitshepi Tebogo| 9302747|MBA | term paper | CAPITAL STRUCTURE AND DIVIDEND POLICY DISCUSSION: How does Standard Chartered Bank Botswana contribute to this discussion? | TABLE OF CONTENTS Abstract 3 Historical Background 4 Literature Review 6 Research Objectives 21 Methodology 22 Challenges 23 Methods 24 Data Analysis 25

Long Term Short Term Financing

353 words - 2 pages Long-Term Short-Term Financing Gwen Florence University of Phoenix June 19, 2012 Long-Term Short-Term Financing Both new and established businesses will find it necessary to incur debts during the course of business operations. Financing may be sought for a multitude of reasons – like smoothing cash flow, purchasing equipment, or expanding operations. The choice between short- and long-term financing

Term

472 words - 2 pages Niplu Rahman is being interviewed by me Shekh Uddin, his name would be abbreviated NR and mine would be abbreviated SU. SU: What is your name? NP: Niplu Rahman SU: What job did you participate in your life? NP: Well uh I did work for Technicolor for a while as a temporary worker then I’ve got hired in at USFarathane as a Material handler. SU: Hmn that’s good, what is your personal opinion regarding fast food? NP: Fast food!! Well we all

Structure Of Term Paper

581 words - 3 pages Term Paper Structure   Through all my life I have faced one question repeatedly which is ‘How to structure term papers?’. This is the question I have experienced from asking to answering. I mean when I was a student I asked it and when I became a teacher, I answered it plenty of times. I know how students get panicky when they have picky teachers to submit their term papers. In such a desperate time, they only want to get a precise answer

Short Term Memory

314 words - 2 pages The Short-term Memory is known as the memory system in which information is held for brief periods of time while being used. We also can say that it is the information we are currently aware of or thinking about. This memory system goes through the process of selective attention, which is the ability to focus on one stimulus from among all sensory input. Is known that some memory theorists use the term working memory as a synonym of

Short-Term Memory

2442 words - 10 pages Short-term Memory Name: Institution: Short Term Memory Part 1: Early studies suggested that a cognitive task is correlated with working memory because (and only when) the processing portion of both tasks is similar. Review the evidence for and against this assumption The working memory describes a comprehensive system that is tasked with holding and processing incoming and already warehoused information (Daneman, & Carpenter, 1980

Moral Philosophy Term Paper

845 words - 4 pages Cagayan State University Tuguegarao City, Carig Campus College of Arts and Sciences “UTILITARIANISM” A Term Paper in Philospohy 12 (Moral Philosophy) SUBMITTED TO: Karen Acoba Instructor SUBMITTED BY: Joanne Marie B. Sanchez, BS BIO I – A 11:30 – 1:00 pm TTH March, 2016 Introduction “What is right and wrong?” Every day we ask that question, whether in simple situations like choosing a dress to wear in a party, or complicated ones

Related Essays

Term Essay

964 words - 4 pages expression expansion following WWII 4. How does the loanable funds theory explain the level of interest rates? a. The theory says that interest rates are a function of the supply of and demand for loanable funds during a specified period. 5. What are the main sources of loanable funds? Indicate and briefly discuss the factors that affect the supply of loanable funds. a. Short term funds--Current savings—comes from all sectors

Term Paper 909 Words

909 words - 4 pages t TERM PAPER Course Code:  MIB 130                                                                 Credit Units: 04 Objectives   The aim of the term paper is to provide the students with an opportunity to further enhance their knowledge in a sector of their choice by undertaking a significant practical unit of examining and analyzing various aspects of business management at a level commensurate with the learning outcomes of the various

Term Poaper Essay

273 words - 2 pages Term paper Ggggggggg ggggggg gggg ggg ggg gggg ggg gggg ggggg gggggg gggg gg gggggg gggg ggggggg ggggg ggg ggggggg ggggggg gggggg gggggg gggg ggggg gggg ggggg gggg ggggg ggg gggg ggg gg ggg ggg ggg ggg ggg ggg gg ggg ggg gg ggg ggg ggg ggg ggg gg gg gg ggg gg ggg gg g gggg gg g gggg g ggg ggg ggg ggg ggg ggg ggg gg gg ggg ggg ggg ggg gg ggg gg g ggg gggg gggg ggg gg ggg gg g ggg gg gggg gggg gggg gggg ggg ggg ggggg ggv hggg gggg gggg gggg

Term Papers

297 words - 2 pages based on the significance of autocorrelation coefficients are valid only after controlling for the ARCH effects (Errunza et al., 1994). The Autoregressive Conditional Heteroskedasticity (ARCH) model introduced by Engle (1982) allows the variance of the error term to vary over time, in contrast to the standard time series regression models which assume a constant variance. Bollerslev (1986) generalized the ARCH process by allowing for a lag