Costco Business Corporation

Company Profile 

Costco Business Corporation known in the business sphere as Costco is one of the renowned American global ventures with a multinational status. It operates a chain of warehouse clubs with the conditional basis of members only. In the year 2015, Costco was one of the topmost ranked retail service providers coming second after Walmart. The following year in 2016, Costco was ranked the world’s best retailer of choice especially in the selling of organic foods and beef. In terms of finances, Costco recorded earnings of $138.4 billion for the fiscal year 2018 (Levine-Weinberg, 2018). The sales posted in the same year indicated a growth of about 9.7% in terms of sales. 

Accounts Receivable for Costco Wholesale Cooperation 

Account receivable is a situation created when a customer has received a given product but has not yet paid for it. The main factor considered in the measurement of account receivable is the number of days sales outstanding. Most of the companies with higher competitive value have the lowest accounts receivable because they do not offer their products on credit. From their financial reports, the primary sources of liquidity for Costco wholesale cooperation are the cash flows. The year 2017and 2018 saw the cash equivalents for the company’s short term investment at $5779 and $7259 respectively. In the same period, there were recorded unsettled credits of approximately $1255 for 2017 and $1348 for 2018 (United States Securities and Exchange Commission, 2018) . This refers to the amount recorded for the credit receivables. It should be noted that the receivables are generally settling within four days of reporting. According to the management, the cash flow recorded for the year 2018 was adequate enough to meet the liquidity requirements as per the United States standards. It should be noted that all the figures indicated above are in millions. 

Balance Sheet for Costco Wholesale Cooperation 

The balance sheet for the year ended 2018 was a financial record for a period of 52 weeks. The records were for the year 2014-2018. Starting with the net property and equipment, there has been recorded consecutive increase in income. For the entry done in 2014, the net property and equipment stood at $ 14830. As stated before there has been realized an increase in which the value stands at $19681 for the year 2018. As regards the total assets, there has also been a tremendous increase from the year 2014 to 2018. In the year 2014, there was an asset value of $32,662 which increased to $33017 in the following year, 2015 ( United States Securities and Exchange Commission , 2018). There was seen a slight increase in the year 2016 with a recording of $33,163. Significant increases were recorded in the years 2017 and 2018 at $36,347 and $ 40830 respectively. The long term debts have not had a stable flow with most of its scores fluctuating. The debts in 2014 stood at $5084 in 2014 the following year saw a decline to $4852 this was followed by another decrease to $ 4061 in 2016 (United States Securities and Exchange Commission, 2018) . There were seen more increase in debts in the year 2017 with a score of $6573. However, there was a decrease in the latest recordings made in the year 2018. 

Income Statement 

Income statements are sometimes referred to as profit and loss accounts which form one of the most vital financial statements for the companies. Important is that the statements show the company expenses and revenues within a specific period. The analysis of the income statements is essential for the determination of the net income or profit a company has. For the case of Costco, the income statement adjustments which are linked to the reinsurance programs are also related to the consolidated balance sheet which is recognized the time the information is known. 

The income statement for the company as reported from the year 2016 to 2018 has been increasing. The statement for the year 2016 just like other years covered a period of 52 weeks. As a matter of records, the net income including non-controlling interest for the year 2016 was $2376, 000,000 (United States Securities and Exchange Commission, 2018) . In the year 2017, the value increased to $2714, 000,000 posting an increase of $338,000,000. As per the latest reports in 2018, the figure stood at $3179, 000,000 indicating a continued increase. As one of the elements in the income statement, foreign currency translation adjustment and other net were recorded. There was foreign currency adjustment of $26 million for the year 2016 the following year saw an increase of the same to $98 million then the ending year financial reports for the year 2018 saw a further increase of $2998, 000,000. 

The figures stated above had a translation to the overall comprehensive income in the respective years which were $2402 million, $2812 million and $2987 million for the years 2016, 2017 and 2018 respectively. Therefore, the overall comprehensive income attributable to the company as at the years indicated above also seen an increase with the years in consecutive order. The records for 2016, 2017 and 2018 stood at $2372 million, $2764 million and 2949 million respectively. As far as the financial analysis is concerned, it can be categorically stated that the company stands in a better financial position as far as the profitability is concerned. Essential for consideration is that the profit has been seen to be increasing with time. Therefore, if in case there are strategies which were put in place to realize the above stated positive outcomes, it is recommended that the strategies are maintained or improved. It is better for a company to be in a position of ensuring increased revenue with as much as possible reduced expenses to ensure an increased profit margin. 

Costco Company Inventory 

As a policy of Costco Company, it gives a provision for its estimated inventory losses between its physical inventory entry and counts which are recorded as percentage net sales based on the experience for the previous years. This provision is adjusted periodically so as to have a reflection on the physical inventory counts. As per the period of the entries, it is required that the recordings are done within the second and fourth quarters of the fiscal years. Again, it should be put into consideration that the inventory costs are decreased by the vendor rebates when earned sometimes the reduction can take place when the company is seen as being in a potential of earning the rebates. However, caution is taken that the decrease should take place when the rebates are as certain or when the estimation is close to being achieved. The company’s inventory value as at the closing year 2018 would have been $11040 million if there could have been the application of FIFO inventory method instead of the LIFO used. However, due to the use of LIFO methods, the inventory recorded was lower than expected. 

Conclusion 

As regards the financial position the Costco Company is at currently, it can be said that it has a competitive advantage looking at its account receivable and liquidity which is at its minimal. Again the company has stability as the assets and value of its investment surpasses the liability as seen on the balance sheet. Therefore, it can be summarized that the reports for the excellence of the company are factual and within the rightful contexts. 

References  

Levine-Weinberg, A. (2018). Costco Wholesale Corporation ends fiscal 2018 with another month of incredible sales. The Motley Fool. Retrieved from https://www.fool.com/investing/2018/09/10/costco-wholesale-corporation-end-fiscal-2018-sales.aspx 

United States Securities and Exchange Commission (2018). Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. Retrieved from http://investor.costco.com/node/20926/html 

Attachments 

COSTCO WHOLESALE CORPORATION 

CONSOLIDATED BALANCE SHEETS 

(amounts in millions, except par value and share data) 

Source: (United States Securities and Exchange Commission, 2018) 

COSTCO WHOLESALE CORPORATION 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 

(amounts in millions) 

Source: (United States Securities and Exchange Commission, 2018)