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?
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