Analysis and Interpretation of Profitability Balance sheets and income statements for Costco Wholesale Corporation follow. Costco...
Fantastic news! We've Found the answer you've been seeking!
Transcribed Image Text:
Analysis and Interpretation of Profitability Balance sheets and income statements for Costco Wholesale Corporation follow. Costco Wholesale Corporation Consolidated Statements of Earnings For Fiscal Years Ended ($ millions) September 2, 2018 Total revenue $141,576 Operating expenses Merchandise costs 123,152 Selling, general and administrative 13,876 Preopening expenses 68 Operating Income Other income (expense) 4,480 Interest expense 159 Interest income and other, ne (121) Income before income taxes 4,442 Provision for income taxes 1,263 Net income including noncontrolling interests 3,179 Net income attributable to noncontrolling interests (45) Net income attributable to Costco $3,134 Costco Wholesale Corporation Consolidated Balance Sheets ($ millions, except par value and share data) September 2, 2018 September 3, 2017 Current assets Cash and cash equivalents $6,055 $4,546 Short-term investments 1,204 1,233 Receivables, net 1,669 1,432 Merchandise inventories 11,040 9,834 Other current assets 321 272 Total current assets 20,289 17,317 Net property and equipment 19,681 18,161 Other assets 860 869 Total assets $40,830 $36,347 Current liabilities Accounts payable $11,237 $9,608 Accrued salaries and benefits 2,994 2,703 Accrued member rewards 1,057 961 Deferred membership fees 1,624 1,498 Other current liabilities 3,014 2,725 Total current liabilities 19,926 17,495 Long-term debt 6,487 6,573 Other liabilities 1,314 1,200 Total liabilities 27,727 25,268 Equity Preferred stock, $0.01 par value: Common stock, $0.01 par value: 4 4 Additional paid-in-capital 6,107 5,800 Accumulated other comprehensive loss (1,199) (1,014) Retained earnings 7,887 5,988 Total Costco stockholders' equity 12,799 10,778 Noncontrolling interests Total equity 304 301 13,103 11,079 Total liabilities and equity $40,830 $36,347 (a) Compute net operating profit after tax (NOPAT) for 2018. Assume that the combined federal and state statutory tax rate is 22%. (Round your answer to the nearest whole number.) 2018 NOPAT = 0 ($ millions) (b) Compute net operating assets (NOA) for 2018 and 2017. 2018 NOA = 0 (s millions) 2017 NOA = 0 (S millions) (c) Compute Costco's RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2018. (Do not round until final answer. Round two decimal places. Do not use NOPM x NOAT to calculate RNOA.) 2018 RNOA = O 2018 NOPM = 0 2018 NOAT = 0 (d) Compute net nonoperating obligations (NNO) for 2018 and 2017. Confirm the relation: NOA = NNO + Total equity. 2018 NNO = o ($ millions) 2017 NNO = 0 ($ millions) (e) Compute return on equity (ROE) for 2018. (Round your answers to two decimal places. Do not round until your final answer.) 2018 ROE = 0 (f) Infer the nonoperating return component of ROE for 2018. Use answers from above to calculate. Round your answer to two decimal places.) (g) Comment on the difference between ROE and RNOA. What does this relation suggest about Costco's use of equity capital? OROE > RNOA implies that Costco's equity has grown faster than its NOA. OROE > RNOA implies that Costco has taken on too much financial leverage. OROE > RNOA implies that Costco is able to borrow money to fund operating assets that yield a return greater than its cost of debt. OROE > RNOA implies that Costco increased its financial leverage during the period. Analysis and Interpretation of Profitability Balance sheets and income statements for Costco Wholesale Corporation follow. Costco Wholesale Corporation Consolidated Statements of Earnings For Fiscal Years Ended ($ millions) September 2, 2018 Total revenue $141,576 Operating expenses Merchandise costs 123,152 Selling, general and administrative 13,876 Preopening expenses 68 Operating Income Other income (expense) 4,480 Interest expense 159 Interest income and other, ne (121) Income before income taxes 4,442 Provision for income taxes 1,263 Net income including noncontrolling interests 3,179 Net income attributable to noncontrolling interests (45) Net income attributable to Costco $3,134 Costco Wholesale Corporation Consolidated Balance Sheets ($ millions, except par value and share data) September 2, 2018 September 3, 2017 Current assets Cash and cash equivalents $6,055 $4,546 Short-term investments 1,204 1,233 Receivables, net 1,669 1,432 Merchandise inventories 11,040 9,834 Other current assets 321 272 Total current assets 20,289 17,317 Net property and equipment 19,681 18,161 Other assets 860 869 Total assets $40,830 $36,347 Current liabilities Accounts payable $11,237 $9,608 Accrued salaries and benefits 2,994 2,703 Accrued member rewards 1,057 961 Deferred membership fees 1,624 1,498 Other current liabilities 3,014 2,725 Total current liabilities 19,926 17,495 Long-term debt 6,487 6,573 Other liabilities 1,314 1,200 Total liabilities 27,727 25,268 Equity Preferred stock, $0.01 par value: Common stock, $0.01 par value: 4 4 Additional paid-in-capital 6,107 5,800 Accumulated other comprehensive loss (1,199) (1,014) Retained earnings 7,887 5,988 Total Costco stockholders' equity 12,799 10,778 Noncontrolling interests Total equity 304 301 13,103 11,079 Total liabilities and equity $40,830 $36,347 (a) Compute net operating profit after tax (NOPAT) for 2018. Assume that the combined federal and state statutory tax rate is 22%. (Round your answer to the nearest whole number.) 2018 NOPAT = 0 ($ millions) (b) Compute net operating assets (NOA) for 2018 and 2017. 2018 NOA = 0 (s millions) 2017 NOA = 0 (S millions) (c) Compute Costco's RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2018. (Do not round until final answer. Round two decimal places. Do not use NOPM x NOAT to calculate RNOA.) 2018 RNOA = O 2018 NOPM = 0 2018 NOAT = 0 (d) Compute net nonoperating obligations (NNO) for 2018 and 2017. Confirm the relation: NOA = NNO + Total equity. 2018 NNO = o ($ millions) 2017 NNO = 0 ($ millions) (e) Compute return on equity (ROE) for 2018. (Round your answers to two decimal places. Do not round until your final answer.) 2018 ROE = 0 (f) Infer the nonoperating return component of ROE for 2018. Use answers from above to calculate. Round your answer to two decimal places.) (g) Comment on the difference between ROE and RNOA. What does this relation suggest about Costco's use of equity capital? OROE > RNOA implies that Costco's equity has grown faster than its NOA. OROE > RNOA implies that Costco has taken on too much financial leverage. OROE > RNOA implies that Costco is able to borrow money to fund operating assets that yield a return greater than its cost of debt. OROE > RNOA implies that Costco increased its financial leverage during the period.
Expert Answer:
Answer rating: 100% (QA)
Answers a NOPAT for 2018 including both Costcos and non controlling interest Sales and other operati... View the full answer
Related Book For
Business
ISBN: 978-0133354263
8th Canadian Edition
Authors: Ricky Griffin, Ronald J.Ebert , Frederick Starke, Melanie Lang, George Dracopoulos
Posted Date:
Students also viewed these accounting questions
-
Balance sheets and income statements for Best Buy Co., Inc. follow. Consolidated Statements of Earnings For Fiscal Years Ended ($ millions) February 26, 2011 February 27, 2010 February 28, 2009...
-
?? . Analysis and Interpretation of Profitability Balance sheets and income statements for 3M Company follow. Consolidated Statements of Income Years ended December 31 ($ millions) Net sales...
-
?? . Analysis and Interpretation of Profitability Balance sheets and income statements for 3M Company follow. Consolidated Statements of Income Years ended December 31 ($ millions) Net sales...
-
Determine the x-and y-intercepts on the graph of the equation. Graph the equation. y=-1.5x + 15
-
In Problem, use - or where appropriate to describe the behavior at each zero of the denominator and identify all vertical asymptotes g(x) =-
-
Suppose the government is considering taxing cigarettes. Because it is often politically more popular to tax the producers of cigarettes than the consumers of cigarettes, the government first...
-
The concentration of $\mathrm{NbOCl}_{3}$ in a tube-flow reactor as a function of several controllable variables is shown in Table B.6. a. Fit a multiple regression model relating concentration of...
-
Adiabatic wind the normal airflow over the Rocky Mountains is west to east. The air loses much of its moisture content and is chilled as it climbs the western side of the mountains. When it descends...
-
1. What is a live load? 2. What is a dead load? 3. What is a dynamic load? 4. What is the best shape for a heavy load?
-
Cary Company manufactures two models of industrial componentsa Standard model and an Advanced Model. It has provided the following information with respect to these two products: Standard Advanced...
-
1. Which of the following is NOT a deductible medical expense: Cost of Vitamins Cost of Eyeglasses Amount paid to primary care physician Health insurance premiums paid by the employee 2. Roger paid...
-
Melissa (who is not a Scottish taxpayer) owns a house which she lets to tenants. The house was let throughout 2020-21 and rents received during the year were 7,200. Her deductible expenditure for the...
-
What is the result of the following? A. 2 B. 18 C. 19 D. 110 E. The code does not compile. } import static java.util.stream.Collectors. *; import } class Ballot { private String name; private int...
-
What are the consequences of gender bias in health and education? Can a large gap between male and female literacy affect development? Why?
-
What issues form the basis of the debate between trade optimists and trade pessimists? Explain your answer.
-
List and briefly discuss the seven market failures that, Stiglitz and his colleagues say, justify a strong government role in developing-country financial sectors. Do you agree or disagree with this...
-
Write a program to ask the user enter a list and then display this list. The user should specify the length of the list and the data type of the elements of the list. The program should work exactly...
-
Write the expression in radical notation. Then evaluate the expression when the result is an integer. 23 -1/2
-
If you were starting your own small business, what are the key marketing pitfalls you would try to avoid?
-
Explain the difference between a vision and a mission.
-
What are the pros and cons of having government actively involved in subsidizing the development of green products?
-
Forecasting transportation demand is important for multiple purposes such as staffing, planning, and inventory control. The public transportation system in Santiago de Chile has gone through a major...
-
CRISA is an Asian market research agency that specializes in tracking consumer purchase behavior in consumer goods (both durable and nondurable). In one major research project, CRISA tracks numerous...
-
Exeter, Inc., is a catalog firm that sells products in a number of different catalogs that it owns. The catalogs number in the dozens but fall into nine basic categories: 1. Clothing 2. Housewares 3....
Study smarter with the SolutionInn App