This would have an impact on the Costco itself, as it would provide stability for the company and help them to be able to take advantage of the shift that was occurring. Evidence of this can be seen by examining the different financial aspects of the company. As the financial statement analysis indicates, that despite various challenges facing retailers over the last five years, Costco is continuing to see sizeable increases in net sales and net income. The different ratios indicate that the company is in strong financial condition, as they have low amounts of debt, high levels of liquidity and profitability. The only problem is that the price of the stock has become more expensive, given the fact that shares have seen such a sizeable increase over the last year. Evidence of this can be seen with the high PE ratio in comparison with its five-year average. As far as risks are concerned, the company has a significantly lower beta factor in comparison with the major market averages (by consistently trading beneath 1.0) This has had an impact upon how the company's debt is rated, with various ratings agencies posting a rating of AA-. The dividend growth model / dividend indicates, continued financial strength of the company, as this amount has been rising consistently since 2004. The Weighted Average Cost of Capital, the cost of common stock and after-tax cost of debt are highlighting continued financial strength of the company, by showing how they have low interest rates for borrowing and raising money in the capital markets. When you put all of these different elements...
This is because the business model is allowing the company to be able to see continued earnings growth, during a time when many retailers are facing continuing economic challenges. This is important, as analyzing the various financial information of the company, is showing how Costco is a low risk trade, with possibility of providing above average growth in the future. Over the course of time, this means that earnings and sales will continue to benefit from these different advantages that they have.
Financial Analysis of Wal Mart Financial Analysis of Wal-Mart Company Overview Wal-Mart Stores Inc. (WMT) is the largest global retail and chain stores operating in various formats. The company operates more than 8000 stores globally across its business segments, which include electronics, groceries, apparel, and small appliances. Although, Wal-Mart operates a global business, however, more than half of the company businesses are located in the United States. Wal-Mart also operates its global businesses
Indeed, the retailer's current ratio has not exceeded 1.0 in recent times. It is however important to note that given its profitability, it is likely that Wal-Mart converts its inventory into cash at a rate that is much faster than that of its peers in the same industry. For this reason, it is highly unlikely that in the normal course of doing business, the retailer could encounter challenges paying
Costco Case Costco: A Case Analysis Costco has long been a retailer of lower-priced goods. Now, the company is moving toward services like insurance, credit cards, phone plans, printing, and other options that could be accessed with a specific membership level. That level would cost users $100 per year, but testing of the options has been very positive in the majority of cases. Still, Costco has much to consider when it comes
Financial Analysis Suppose you are comparing two firms within an industry. One is large and the other is small. Will relative or absolute numbers be of more value in each case? What kinds of statistics can help evaluate relative size? Gibson, Charles H. (2012-05-10). Financial Reporting and Analysis (Page 217). Cengage Textbook. Kindle Edition. When comparing two firms that are unequal in size, the relative financial ratios are more appropriate for any type
Wal-Mart Financial Analysis Wal-Mart Store Inc. is a multinational retailer corporation branded as Wal-Mart in 2008. Founded in 1962, Wal-Mart has now become one of the largest American corporations with chain of retail stores. Wal-Mart sells varieties of consumer goods such as consumer electronics, toys, automobiles, furniture, video games and several other consumers goods. Presently, Wal-Mart enjoys the patronages of 200 million customers per week making the company to record the
0 $0.0 Net income available to common stockholders $17,758.5 $16,468.7 Common dividends $5,400.0 $5,048.0 Addition to retained earnings $12,358.5 $11,420.7 Calculated Data: Operating Performance and Cash Flows 2012 2011 Net operating working capital (NOWC) $1,464.0 ($2,108.0) Total operating capital $144,629.0 $136,320.0 Net Operating Profit After Taxes (NOPAT) $19,182.7 $17,926.7 Net Cash Flow (Net income + Depreciation) $17,758.5 $16,468.7 Operating Cash Flow (OCF) $19,182.7 $17,926.7 Free Cash Flow (FCF) $10,873.7 N/A Calculated Data: Per-share Information 2012 2011 Earnings per share (EPS) $5.26 $4.76 Dividends per share (DPS) $1.60 $1.46 Book value per share (BVPS) $22.63 $20.61 Cash flow per share (CFPS) $5.26 $4.76 Free cash flow per share (FCFPS) $3.22 N/A LIQUIDITY RATIOS (Section 3.2) Industry 2012 2011 Average Liquidity ratios Current Ratio 0.83 0.88 1 Quick Ratio 0.22 0.23 0.3 ASSET Management RATIOS (Section
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