Costco's Financial Accounting

Costco’s common stock is traded on the NASDAQ global market under the symbol “COST.” Preferred stock: $.005 par value; 100,000,000 shares authorized; no shares issued and outstanding. Common stock: $.005 par value; 900,000,000 shares authorized; 437,952,000 and 437,683,000 shares issued and outstanding. Costco stockholders’ equity, according to the balance sheet, is $10,617,000,000 for the August 31, 2014 – August 30, 2015, fiscal year.

Costco 's assets-to-equity ratio has fallen slightly from 2.21 to 2.06. This means that for every dollar of invested capital Costco acquires $2.06 worth of assets in 2001 verses $2.21 worth of assets in 1997. This may indicate that less assets are being acquired. If less assets are acquired, less sales may be generated and if less sales are generated there is less net income yielding less return for shareholders and a less attractive investment opportunity.

This research paper will detail the modified accrual revenue recognition in State and Local Government (SLG) accounting. There will also be discussions on the guidance of governmental fund expenditure recognition, and how it is used in state and local governments. Certainly, there are differences between the fund and the government-wide financial statements, but there are some similarities. Within the paper, it will include the purpose as well as the content of the financial statements. While explaining the government-wide financial statements, the preparation using derived information in the conversion worksheets, will be presented. Lastly, in this research paper, I will explain the elements of a Comprehensive Annual Financial Report (CAFR).

cognizant of the fact that the choices he makes can affect the price a buyer pays

definitely recognize the importance of this as seen through their capturing of the company’s sales in percentage according to different categories of items. Various items such as foods, sundries, hardliners and fresh foods among others have been captured in the company’s annual report according to their percentage volume of net sales for the company for the last three financial years. The categorisation of items allows both the company’s directors and outsiders to keep up with the economic reality of the company’s performance over the last few years. The directors can then, for example, decide to increase the amount of warehouse space afforded to foods depending on the consistent performance of the category in terms of percentage volume of sales.

Numbers and Percentages prove that Costco is a very successful company. Costco’s gross margin is 12.63%. This is lower than the industries gross margin, which is 19.17%. (Y Charts, 2014). Costco’s total debt/ equity ratio is 0.414 as of August 2014 while the industry’s total debt/ equity is 23.0. The Return on Assets (ROA) for Costco stands at 6.44% as of August 2014. Its current Ratio is 122%, which is a 3% difference from last year, which was 119% (CSI Market, 2014).

Costco Wholesale is recognized as the largest wholesale club operator in the US. Over the three-year time period of 2002-2004, this company has expanded its membership base while increasing its number of warehouses both in the U.S. and internationally. In 2004 alone, net sales increased 13.1% over the prior year, driven by an increase in comparable sales of 10% and the opening of twenty new warehouses; net income increased for fiscal 2004 by 22.4%, or $1.85 per diluted share; and for the first time, the Board of Directors declared a quarterly cash dividend, with the company issuing quarterly dividends in the third and fourth quarters of $0.10 per share.

As noted in Wikipedia Oracle is headquartered in Redwood, California. It was founded in 1977 and is the world's third largest soft wear developer in sales. According to Yahoo Finance Oracle is a multi-faceted operation. Oracle provides a vast amount of services for the internet and computer. It provides cloud applications, IT consulting services, licenses middleware software which includes database and database management. It has 115,000 full time employees and is run by co-founder, CEO Larry Ellison who has been the only CEO of the company since it's inception. Also noted in Wikipedia he is the top paid CEO in the world. In 2013 Oracle

Costco’s strengths are market cap, return on equity, and total debt/equity. Costco is another large scaled company at which their investor is not exposed to risk of gimmicks. Costco has a market cap of $75,156 million. The company’s return on equity is very high at 20.34%. Lastly, their debt ratio is at 40.77% which shows a strong balance sheet.

Another interesting trend which demonstrates growth is the rise in interest income and other expenses from 0.07% of sales in 1997 to 0.13% in 2001 on the income sheet. Typically, this value fluctuates each year with the amount of cash a company keeps on hand. Costco’s increase suggests that the company either increased its amount of short-term deposit investments’ held, switched its funds to money market funds, savings accounts, or CDs with higher yielding interest rates, or their existing funds experienced a growth in interest rates.

As the manager of an individual Costco store, I need different kinds of information than an outside investor who is considering lending money to the company or investing in common stock. I need information that can help me make a sound decision to either add or discontinue certain products (Freedman, 2016). I will also use activity based costing techniques to help determine to whom to sell products, so advertising to the targeted consumers will be cost effective. Controlling the cost is a very important part of my job (Callen, 1991). The information that I need affects the costs of day to day operations unlike the investors who only need an annual report to make an investment decision (Edmonds, Olds, & Tsay, 2008). Cost can be controlled by measuring the ex post performance within the department or in comparison to other departments in the same industry (Callen,

On September 15,1983 the world had witness the opening of Costco the first warehouse on Seattle, Washington by James Senegal and Jeffrey H. Brotman. The owners had started in distribution their wholesale by working for Price at both FedMart and Price Club and Brotman, an attorney from an old Seattle retailing family, had also been involved in retail distribution from an early age.

Torres’ common-size financial statements also show the changing composition of Costco’s financing structure over time. The fact that interest expense consistently fell over the five year span from -0.35% of net sales in 1997 to -0.09% in 2001 demonstrates Costco’s ability to reduce its overall amount of debt during these years. Exhibit nine’s balance sheet portion supports this reduction, documenting an increase in total current liabilities from 35.86% of total assets in 1997 to 40.76% in 2001 and an increase in accounts payable from 25.46% of assets in 1997 to 27.03% in 2001. This signifies that the company’s debts or obligations due within one year increased, further corresponding with the fact that short-term borrowing increased from 0.46% of assets in 1997 to 1.93% in 2001. With an increase in short-term borrowing it is logical to expect to see a decrease in long-term borrowing. The income statement proves that this is indeed the case, documenting a decrease in long-term debt from 16.74% of sales in 1997 to 8.52% in 2001. This relates back to the decrease in Costco’s interest expense on the income statement, representing the company’s decision to switch to short-term and away from long-term methods. Furthermore, the decrease in long-term debt helped account for a decrease in total liabilities from

Cost accounting is a type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step of production as well as fixed costs such as depreciation of capital equipment. Cost accounting will first measure and record these costs individually, then compare input results to output or actual results to aid company management in measuring financial performance (Cost Accounting, n.d.).

Information gathered from Costco’s balance sheet show that it has steadily grew a larger cash reserve. It has a higher rate of outstanding receivables and has sharply increased the rate of inventory kept in stock from 16% in 1997 to 27% in 2001. Another interesting fact to notice is the high increase in property, plants, and equipment increase in proportion to assets, from 31% in 1997 to 58% in 2001. Costco has a much higher ratio of accounts payable in 2001 compared to 1997, which can be explained by the many investments and purchases of property, land, and plans. The amount of short-term liabilities to assets has more than doubled, from 20% to 41%. This may be a troublesome trend if it continues since they