The individual assignment is based on the case, Costco Wholesale Corporation Financial Statement Analysis (B). Costco is a membership warehouse club, dedicated to bringing our members the best possible prices on quality brand-name merchandise. With hundreds of locations worldwide, Costco provides a wide selection of merchandise, plus the convenience of specialty departments and exclusive member services, all designed to make your shopping experience a pleasurable one. Costco Wholesale went public in November 1985 at a price of $10 per share. At the time, it had 15 warehouses in operations. Investors who bought into the company at its initial public offering profited richly over the next 17 years. However, as with most investments, gains were not made evenly over the years.

Margarita Torres had just completed her analysis of Costco’s financial performance over the previous five years. She concluded that the company had grown at a manageable rate, using internally generated funds rather than debt or equity to finance expansion. In 2001, operations had suffered slightly from the rapid introduction of stores. Nevertheless, the financial ratios continued to indicate that there was not a significant deterioration in operational efficiency. Asset and inventory turnover ratios remained at steady levels, indicating that the company had not the overbuilt capacity in relation to customer demand. Both gross and operating margins remained healthy.

Required

Based on the particulars provided in the case, prepare a case analysis report using the points below as your guidepost.

1. Do you believe Costco’s current operational efficiency and financial performance are appropriate?
2. Should Margarita Torres, the financial analyst recommend a large share purchase and hold for prospective investors? What are the primary advantages and disadvantages of such a move?
3. As a member of Costco’s controlling shareholders, would you be in favor of this proposal? Would you be in favor of it as a non-controlling shareholder?

NB: These questions are provided to guide your thinking on the case, but should not be the main response and consideration of the case. You are to respond in a written report as articulated in the template below.

Components of Case Report	Requirements	Mark Allocated (%)
Title Page	Report title, your name, students number, submission date (Any other information for identification)	2½ (Marks)
Table of Content	Use the MS table editor to structure your report to facilitate the flow list of numbered sections and sub-sections in the report.	2½ (Marks)
Contents (5-8 page report)	A paragraph describing the company’s business model Analyze the company's history, developments, business model, and growth over the period. Identify the company's internal strengths and weaknesses and how these have developed over-time (i.e., use SWOT analysis – based on Porters five-forces)	(10 Marks)
	A paragraph outlining the industry in which this company operates, including future prospects (Industry Outlook). Analyze its external environment and how it has aligned itself to this environment (Use Porter’s Industry’s Competitive Analysis Framework to do this)	(10 Marks)
	Provide a comparison of financial performance and Credit Worthiness of Costco Wholesale Corporation financial indicators and the industry as well as the market based on the case information; include an explanation of your choices (i.e., why?)	(25 Marks)
	Provide your interpretation and future prospects of creditworthiness at Costco Wholesale Corporation in light of the general industry/ economic environment and the information (i.e., industry analysis) of the case.	(25 Marks)
	Based on your analyses above, provide a brief forecast of the company’s future prospects. Using tools like charts, Delphi method, game theory, regression analysis etc. where reasonably possible. NOTE: This will probably feel uncomfortable, but be assured that you cannot be wrong on this part! Nobody knows the future until it happens. This is merely a preview of the forecasting that is necessary for budgeting/operational planning.	(20 Marks)
Resources Consulted and Used	Appropriate bibliographic and reference listing of ALL your research sources. Use APA citation style.	(2½ Marks)
	Appendices should include a copy of the source Statement of Income, Statement of Financial Position, and Cash Flow Statement (only).	(2½ Marks)
Total		(100 Marks)

Answer rating: 100% (QA)

COSTCO WHOLESALE CORPORATION FINANCIAL STATEMENT ANALYSIS B Margarita Torres had just completed her analysis of Costcos financial performance over the previous five years She concluded that the compan... View the full answer