Financial statement analysis and common stock valuation

Common-Size Income Statement
Quarterly Data

Income statement components (revenues and expenses) shown as percentage of total sales.

Common-Size Balance Sheet: Assets
Quarterly Data

Assets components shown as percentage of total assets.

Dividend Discount Model (DDM)

The dividend discount model (DDM) is a technique for estimating the value of a share of Costco Wholesale Corp. common stock issue as the present value of all future dividends.

• Intrinsic Stock Value (Valuation Summary)
• Required Rate of Return (r)
• Dividend Growth Rate (g)

Income Statement

The income statement (statement of earnings) reports on the performance of Costco Wholesale Corp., the result of its operating activities.

Analysis of Profitability Ratios

Measures the income of Costco Wholesale Corp. relative to its revenues and invested capital.

• Profitability Ratios (Summary)
• Gross Profit Margin
• Operating Profit Margin
• Net Profit Margin
• Return on Equity (ROE)
• Return on Assets (ROA)

Analysis of Liquidity Ratios
Quarterly Data

Measures the adequacy of a Costco Wholesale Corp. cash resources to meet its near-term cash obligations.

• Liquidity Ratios (Summary)
• Current Ratio
• Quick Ratio
• Cash Ratio

Analysis of Short-term (Operating) Activity Ratios
Quarterly Data

Evaluates revenues and output generated by the Costco Wholesale Corp. assets. Operating performance ratios describe the relationship between the Costco Wholesale Corp. level of operations and the assets needed to sustain operating activities.

• Short-term Activity Ratios (Summary)
• Inventory Turnover
• Receivables Turnover
• Payables Turnover
• Working Capital Turnover
• Average Inventory Processing Period
• Average Receivable Collection Period
• Operating Cycle
• Average Payables Payment Period
• Cash Conversion Cycle

Statement of Comprehensive Income

Comprehensive income is the change in equity (net assets) of Costco Wholesale Corp. during a period from transactions and other events and circumstances from non-owners sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

Analysis of Liquidity Ratios

Measures the adequacy of Costco Wholesale Corp. cash resources to meet its near-term cash obligations.

• Liquidity Ratios (Summary)
• Current Ratio
• Quick Ratio
• Cash Ratio

Analysis of Long-term (Investment) Activity Ratios

Measures how efficiently Costco Wholesale Corp. generates revenues from its investments in fixed or total assets.

• Long-term Activity Ratios (Summary)
• Net Fixed Asset Turnover
• Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
• Total Asset Turnover
• Equity Turnover