Part 1: Excel
Locate and download the latest Excel 10-K Annual Report from the “Costco SEC Filings” website,
- In the Excel file, perform a vertical and horizontal analysis on both the income statement and balance sheet for the most recent year.
- Using 3 years of income statement data, perform a trend analysis of the income statement, specifically net sales, operating expenses, and net income.
- In a new sheet in the Excel file, compute the following ratio analysis for the most recent 2 years:
Ratio Analysis for the Most Recent 2 Years:
- Current Ratio
- Accounts Receivable Turnover Ratio
- Inventory Turnover Ratio
- Profit Margin Ratio
- Return on Assets Ratio
- Return on Common Stockholders’ Equity
- Earnings Per Share
- Debt to Total Assets Ratio
- Cash Debt Coverage Ratio
Part 2: Memo
After reviewing the horizontal and vertical analysis of equity, revenue, and profit for the 2 years and the liquidity, profitability, and solvency ratios, prepare a 700-1,000-word memo as though you were the financial advisor and explain the following:
- Explain the purpose of horizontal and vertical analysis along with ratio analysis.
- Based on the trend analysis and data presented, do you think Costco’s financial performance will decrease, stay flat, or increase in the next few years? Would Costco be a good investment at this point, why or why not?