Costco Wholesale Corporation: Financial Analysis

We compared both of the companies income statements and balance sheets. Both of these companies are making a profit although, Costco is much bigger and making much more of a profit than Weis. Knowing that both of these companies are making a profit and are successful we have to turn to certain ratios so that we know for sure that this is a good investment for Costco. The first ratio we will look at is the current ratio. What this ratio will tell us and the shareholder at Costco is the ability to pay short term and long term obligations. The higher the ratio the better the company is with paying back short term and long term expenses. When the ratio falls below one this means that the company's liabilities is greater than their assets. Over the last few Costco has had an decent current ratio but last year they had some trouble being able to pay their obligations. Their ratio fell below one which means that their liabilities became greater than their assets. The way they can turn this around is by acquiring Weis. Weis has had a solid current ratio for the last three years. They are well above the one mark which makes them valuable to Costco. Once they

The total debt to total capital ratio is total debt divided by total debt plus equity. The total debt to total capital ratio measures the percentage of the firm’s capital provided by debtholders. Overall, between 2006 and 2016 Costco has the lowest average total debt to total capital ratio in comparison to its competitors. According to an article called “Wholesale and Distribution Industry Key Performance Indicators (KPIs)” written by Paul Melville, the wholesale retail industry average for the total debt to total capital ratio is 20.6%. In 2015 Costco had a total debt to total capital ratio of 40.3% which was well above the industry average. However, Target had a ratio of 51.2% which is 10.9% higher than Costco. Creditors prefer low total

Costco is the second largest overall retailer in the United States, and the largest in the warehouse club retailer category with revenues of over $105 billion in 2013. Costco operates with the business model of charging an annual membership fee to its customers in exchange for heavy discounts on selected brands of a wide variety of merchandise. Towards the end of August 2014, the company operated roughly 663 warehouses globally; including 468 in the U.S., 88 in Canada, 33 in Mexico, 26 in U.K., 20 in Japan, 10 in Taiwan, 11 in Korea, and 6 in Australia. They have approximately 76.4 million members, of those were included 31.6 million gold star members. Besides selling merchandise, Costco provides in-store services like onsite fueling stations, pharmacy services, hot-dog stands and optical centers to attract customers to shop there more frequently.

organization sponsored health care. Costco’s good pay and advantages boosts revenue and develop the quality service.

Costco wholesale is a multi-billion dollar global retailer with warehouse club operations in eight countries. They are recognized as the leaders in the warehousing field. Costco is dedicated to quality in every area of their business and respected for their outstanding business ethics. Costco focuses on selling products at low prices, often at very high volume. These goods are usually bulk-packaged and marketed primarily to large families and businesses. Despite their large size and their international expansion, they provide a family atmosphere in which employees thrive and succeed. Costco values its employees and its brands.

According to the Food Retail Industry Profile, Costco has an advantageous advertising program such as the Costco connection, a publication for associates, coupon mailers, weekly email blasts from costco.com, and handouts. These are directed towards current members for promoting selected merchandise. Additionally, Costco offers valuable services such as digital photos processing, travel, business delivery, pharmacy, and membership services. One important point to mention is that Costco also manages gasoline stations at many of its U.S. locations which is very convenient for almost all its memberships, and what to say about its price it is more economical than in other places.

It was first built in 1983 in Seattle, and it has now became the second largest retailer in the United States. The company operates both domestically and internationally, and it has a total number of 687 warehouses. It has 481 stores in the United States and Puerto Rico and 206 stores in other countries such as the United Kingdom, Mexico, Taiwan, Korea, Japan, Australia, and Spain. Unlike many other retail stores, Costco provides membership only services. There are three types of membership, and those are Business, Gold Star, and the Executive membership. As the company shows the different kinds of membership, Costco’s target customers are small to medium businesses and large householders. Because the company is targeting those customers, the items that are selling at Costco come in a bulk package. The company carries a wide product category ranging from groceries, television and media, electronic devices, books, camera, beauty aids, furniture, jewelry, sporting goods, kitchen appliances, automotive supplies, office supplies and office equipments. Furthermore, it offers travel services, food courts, pharmacies, opticians, and Photo Centers. Carrying only top quality brands and selling numerous items at low prices, Costco’s annual revenue exceeds more than $112 billion and total full-time and part-time employees are about 200,000

Costco Wholesale Corporation is the seventh largest retailer in the world. As of July 2012[update] it was the fifth largest retailer in the United States, and the largest membership warehouse club chain in the United States. Costco and its subsidiaries (Costco or the Company) are principally engaged in the operation of membership warehouses in the United States, Canada, the United Kingdom, Japan, Australia, through

Our general findings about Costco are that it is an all-around great, moneymaking, expanding company. To start off, Costco is a membership warehouse that offers its customers low prices on exclusive, private-label products in a wide assortment of merchandise categories that generate high sales volumes and quick inventory turnover. A combination of this turnover, resourceful distribution, merchandise with “no-frill” and a self-service warehouse gives this company extensively lower gross margins than your typical, everyday warehouse or supermarket.

|Opportunities |Expand into new markets such as China and |Give more focus to the range of products |

It is important that you first understand Costco as a company before you can understand their new marketing strategy. Costco is an American based wholesale corporation. It is a membership-only warehouse club that offers a variety of merchandise to members. In 2014, Costco became part of the top two biggest retailers in the America. It is now also the third largest retailer internationally. Costo is dedicated to delivering quality products to their members, but at the lowest prices. The company is able to provide a vast selection of products with the help of their hundreds of locations worldwide. They also provide exclusive member services to ensure that their

According to Costco corporation, “Costco has some of the best top suppliers, PepsiCo, and Kraft Heinz”. Having these top brands gives the company an advantage to bargain with their prices. A new competitor coming into the retail world, would find it hard to match Costco products and prices.

The company recorded revenues of $74.3 billion in FY ending December 2014, an increase of 4.2% over FY 2013. The operating profit of the company was approximately $21 billion in FY 2014, an increase of 14.1% over FY2013. The net profit was $ 16,323 million in FY2014, an increase of 18%

In the last two quarters, the company brought in nearly $2.03 billion in operating cash flow, whereas CapEx amounted to $1.17 billion, leaving a respectable $867 million in free cash flow for the period. But regular dividends totaled to only $156 million, or 18 percent of free cash flow.

When evaluating PepsiCo, Inc. we must view the company by its competing business segments. They are; Frito-Lay North America, Quaker Foods North America, Latin American Foods, PepsiCo Americas Beverages, Europe, Asia and the Middle East, Africa. Shown in the 2011-2013 Financial Data (Gamble) we can see that PepsiCo Beverages and Frito-Lays stands takes lead. The smallest player in PepsiCo’s business segment is Quaker Foods. However, Quaker Foods displays consistently stagnant net revenues annually.