From net sales to the number of warehouses, the ten-year operating and financial highlights on pages B-2-B-3 of Appendix B in this textbook provide a historical perspective to Costco's growth. This summary reports trends that are an important input in the budgeting process. The first step of the budget process is to establish operational goals. 

Instructions: Use the information in this report to suggest operational goals for Costco in 2004. For each item, examine the trend from 2003 to 2006 and decide what operational goal you believe Costco should attempt to achieve in 2007. Be prepared to defend your goals in class.

1. Costco will open year.) stores in 2007. (Calculate the percent increase in the number of warehouses each year)

2. Costco will control product costs and achieve a gross profit percentage in 2007. (Gross profit and gross margin are similar terms. Calculate a gross profit percentage for each year.)

3. Costco will achieve a ____________ percent increase in comparable warehouse sales during 2007.

4. Costco will sign up _____________ new members in 2007.

Appendix B2-B3

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Percent Increase Number of Warehouses 12% Warehouses in Operation FINANCIAL HIGHLIGHTS Net Sales 475 60,000 58,000 (474 at 123100) 56,000 468 450 54,000 52,000 433 50,000 417 $ Millions 48,000 47.149 46,000 44.000 400 42.000 41,895 40,000 37 905 38.000 375 374 2002 2003 2004 2005 2006 At Fiscal Year End Comparable Sales Growth 18 10% 10% 17 4% 2% 8% 0% 2002 2003 2004 2005 2006 Fiscal Year Milions 16 51879 Net Income 1.150 58,963 1.103 1.100 1,063 1,000 1.000 650 $ Millions 000 850 100 750 721 700 700 650 . 2002 2003 2004 Fiscal Year 2005 2006 2002 2000 2004 2005 2006 Fecal Ye Gold Star Members Membership 15 14954 15.018 14.597 14 2002 2003 2004 Fiscal Year 16.230 Business Members 54 17338 52 Millions 50 4.476 44 2005 2006 636 4810 5.050 2000 2003 2004 2005 2008 Fiscal Year 5.214