In: Accounting
Compute Costco's financial leverage (FLEV), Spread, and noncontrolling interest (NCI) ratio for 2016; recall, NNE = NOPAT-Net income. Remember to use negative signs with answers, when appropriate.
Costco Wholesale Corporation | |||
---|---|---|---|
Consolidated Statements of Earnings | |||
For Fiscal Years Ended ($ millions) | August 28, 2016 | August 30, 2015 | August 31, 2014 |
Revenue | |||
Net Sales | $116,073 | $113,666 | $110,212 |
Membership fees | 2,646 | 2,533 | 2,428 |
Total revenue | 118,719 | 116,199 | 112,640 |
Operating expenses | |||
Merchandise costs | 102,901 | 101,065 | 98,458 |
Selling, general and administrative | 12,068 | 11,445 | 10,899 |
Preopening expenses | 78 | 65 | 63 |
Operating Income | 3,672 | 3,624 | 3,220 |
Other income (expense) | |||
Interest expense | (133) | (124) | (113) |
Interest income and other, net | 80 | 104 | 90 |
Income before income taxes | 3,619 | 3,604 | 3,197 |
Provision for income taxes | 1,243 | 1,195 | 1,109 |
Net income including noncontrolling interests | 2,376 | 2,409 | 2,088 |
Net income attributable to noncontrolling interests | (26) | (32) | (30) |
Net income attributable to Costco | $2,350 | $2,377 | $2,058 |
Costco Wholesale Corporation | |||
---|---|---|---|
Consolidated Balance Sheets | |||
($ millions, except par value and share data) | August 28, 2016 | August 30, 2015 | |
Assets | |||
Current assets | |||
Cash and cash equivalents | $3,379 | $4,801 | |
Short-term investments | 1,350 | 1,618 | |
Receivables, net | 1,252 | 1,224 | |
Merchandise inventories | 8,969 | 8,908 | |
Deferred income taxes and other current assets | 268 | 228 | |
Total current assets | 15,218 | 16,779 | |
Property and equipment | |||
Land | 5,395 | 4,961 | |
Buildings and improvements | 13,994 | 12,618 | |
Equipment and fixtures | 6,077 | 5,274 | |
Construction in progress | 701 | 811 | |
Gross property and equipment | 26,167 | 23,664 | |
Less accumulated depreciation and amortization | (9,124) | (8,263) | |
Net property and equipment | 17,043 | 15,401 | |
Other assets | 902 | 837 | |
Total assets | $33,163 | $33,017 | |
Liabilities and equity | |||
Current liabilities | |||
Accounts payable | $7,612 | $9,011 | |
Current portion long-term debt | $1,100 | $1,283 | |
Accrued salaries and benefits | 2,629 | 2,468 | |
Accrued member rewards | 869 | 813 | |
Deferred membership fees | 1,362 | 1,269 | |
Other current liabilities | 2,003 | 1,695 | |
Total current liabilities | 15,575 | 16,539 | |
Long-term debt, excluding current portion | 4,061 | 4,852 | |
Other liabilities | 1,195 | 783 | |
Total liabilities | 20,831 | 22,174 | |
Equity | |||
Preferred stock, $0.005 par value: | |||
100,000,000 shares authorized; no shares issued and outstanding | 0 | 0 | |
Common stock, $0.005 par value: | |||
900,000,000 shares authorized; | |||
437,524,000 and 437,952,000 shares issued and outstanding | 2 | 2 | |
Additional paid-in-capital | 5,490 | 5,218 | |
Accumulated other comprehensive loss | (1,099) | (1,121) | |
Retained earnings | 7,686 | 6,518 | |
Total Costco stockholders’ equity | 12,079 | 10,617 | |
Noncontrolling interests | 253 | 226 | |
Total equity | 12,332 | 10,843 | |
Total liabilities and equity | $33,163 | $33,017 |
(a) Compute Costco's financial leverage (FLEV), Spread, and
noncontrolling interest (NCI) ratio for 2016; recall, NNE =
NOPAT-Net income.
Remember to use negative signs with answers, when
appropriate.
2016 NNO =$Answer
million
2015 NNO =$Answer
million
2016 NNE =$Answer
million
2016 NNEP =Answer
% Round NNEP to two decimal places.
2016 FLEV =
Answer
Round FLEV to four decimal places.
2016 Spread = Answer
% Round Spread to two decimal places.
2016 NCI ratio = Answer
Round NCI ratio to four decimal places.
(b) Assume that Costco's return on equity (ROE) for 2016 is 20.71%
and its return on net operating assets (RNOA) is 20.66%. Confirm
computations to yield the relation: ROE = [RNOA + (FLEV X Spread)]
X NCI ratio.
2016 ROE =Answer
% = [Answer
%+(Answer
X Answer
%)] X Answer