Stock Analysis on Net
Stock Analysis on Net

Costco Wholesale Corp. (NASDAQ:COST)

Analysis of Goodwill and Intangible Assets

Microsoft Excel

Adjustments to Financial Statements: Removal of Goodwill

Costco Wholesale Corp., adjustments to financial statements

US$ in millions

Microsoft Excel
Sep 3, 2023 Aug 28, 2022 Aug 29, 2021 Aug 30, 2020 Sep 1, 2019 Sep 2, 2018
Adjustment to Total Assets
Total assets (as reported) 68,994 64,166 59,268 55,556 45,400 40,830
Less: Goodwill 994 993 996 988 53 —
Total assets (adjusted) 68,000 63,173 58,272 54,568 45,347 40,830
Adjustment to Total Costco Stockholders’ Equity
Total Costco stockholders’ equity (as reported) 25,058 20,642 17,564 18,284 15,243 12,799
Less: Goodwill 994 993 996 988 53 —
Total Costco stockholders’ equity (adjusted) 24,064 19,649 16,568 17,296 15,190 12,799

Based on: 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01), 10-K (reporting date: 2018-09-02).

Costco Wholesale Corp., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Costco Wholesale Corp., adjusted financial ratios

Microsoft Excel
Sep 3, 2023 Aug 28, 2022 Aug 29, 2021 Aug 30, 2020 Sep 1, 2019 Sep 2, 2018
Total Asset Turnover
Reported total asset turnover 3.45 3.47 3.24 2.94 3.29 3.39
Adjusted total asset turnover 3.50 3.53 3.30 2.99 3.29 3.39
Financial Leverage
Reported financial leverage 2.75 3.11 3.37 3.04 2.98 3.19
Adjusted financial leverage 2.83 3.22 3.52 3.15 2.99 3.19
Return on Equity (ROE)
Reported ROE 25.11% 28.31% 28.51% 21.89% 24.00% 24.49%
Adjusted ROE 26.15% 29.74% 30.22% 23.14% 24.09% 24.49%
Return on Assets (ROA)
Reported ROA 9.12% 9.11% 8.45% 7.20% 8.06% 7.68%
Adjusted ROA 9.25% 9.25% 8.59% 7.33% 8.07% 7.68%

Based on: 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01), 10-K (reporting date: 2018-09-02).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Costco Wholesale Corp. adjusted total asset turnover ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Costco Wholesale Corp. adjusted financial leverage ratio decreased from 2021 to 2022 and from 2022 to 2023.
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Costco Wholesale Corp. adjusted ROE deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Costco Wholesale Corp. adjusted ROA improved from 2021 to 2022 and from 2022 to 2023.

Costco Wholesale Corp., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Microsoft Excel
Sep 3, 2023 Aug 28, 2022 Aug 29, 2021 Aug 30, 2020 Sep 1, 2019 Sep 2, 2018
As Reported
Selected Financial Data (US$ in millions)
Net sales 237,710 222,730 192,052 163,220 149,351 138,434
Total assets 68,994 64,166 59,268 55,556 45,400 40,830
Activity Ratio
Total asset turnover1 3.45 3.47 3.24 2.94 3.29 3.39
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net sales 237,710 222,730 192,052 163,220 149,351 138,434
Adjusted total assets 68,000 63,173 58,272 54,568 45,347 40,830
Activity Ratio
Adjusted total asset turnover2 3.50 3.53 3.30 2.99 3.29 3.39

Based on: 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01), 10-K (reporting date: 2018-09-02).

2023 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 237,710 ÷ 68,994 = 3.45

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 237,710 ÷ 68,000 = 3.50

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Costco Wholesale Corp. adjusted total asset turnover ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.

Adjusted Financial Leverage

Microsoft Excel
Sep 3, 2023 Aug 28, 2022 Aug 29, 2021 Aug 30, 2020 Sep 1, 2019 Sep 2, 2018
As Reported
Selected Financial Data (US$ in millions)
Total assets 68,994 64,166 59,268 55,556 45,400 40,830
Total Costco stockholders’ equity 25,058 20,642 17,564 18,284 15,243 12,799
Solvency Ratio
Financial leverage1 2.75 3.11 3.37 3.04 2.98 3.19
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets 68,000 63,173 58,272 54,568 45,347 40,830
Adjusted total Costco stockholders’ equity 24,064 19,649 16,568 17,296 15,190 12,799
Solvency Ratio
Adjusted financial leverage2 2.83 3.22 3.52 3.15 2.99 3.19

Based on: 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01), 10-K (reporting date: 2018-09-02).

2023 Calculations

1 Financial leverage = Total assets ÷ Total Costco stockholders’ equity
= 68,994 ÷ 25,058 = 2.75

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Costco stockholders’ equity
= 68,000 ÷ 24,064 = 2.83

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Costco Wholesale Corp. adjusted financial leverage ratio decreased from 2021 to 2022 and from 2022 to 2023.

Adjusted Return on Equity (ROE)

Microsoft Excel
Sep 3, 2023 Aug 28, 2022 Aug 29, 2021 Aug 30, 2020 Sep 1, 2019 Sep 2, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Costco 6,292 5,844 5,007 4,002 3,659 3,134
Total Costco stockholders’ equity 25,058 20,642 17,564 18,284 15,243 12,799
Profitability Ratio
ROE1 25.11% 28.31% 28.51% 21.89% 24.00% 24.49%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income attributable to Costco 6,292 5,844 5,007 4,002 3,659 3,134
Adjusted total Costco stockholders’ equity 24,064 19,649 16,568 17,296 15,190 12,799
Profitability Ratio
Adjusted ROE2 26.15% 29.74% 30.22% 23.14% 24.09% 24.49%

Based on: 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01), 10-K (reporting date: 2018-09-02).

2023 Calculations

1 ROE = 100 × Net income attributable to Costco ÷ Total Costco stockholders’ equity
= 100 × 6,292 ÷ 25,058 = 25.11%

2 Adjusted ROE = 100 × Net income attributable to Costco ÷ Adjusted total Costco stockholders’ equity
= 100 × 6,292 ÷ 24,064 = 26.15%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Costco Wholesale Corp. adjusted ROE deteriorated from 2021 to 2022 and from 2022 to 2023.

Adjusted Return on Assets (ROA)

Microsoft Excel
Sep 3, 2023 Aug 28, 2022 Aug 29, 2021 Aug 30, 2020 Sep 1, 2019 Sep 2, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Costco 6,292 5,844 5,007 4,002 3,659 3,134
Total assets 68,994 64,166 59,268 55,556 45,400 40,830
Profitability Ratio
ROA1 9.12% 9.11% 8.45% 7.20% 8.06% 7.68%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income attributable to Costco 6,292 5,844 5,007 4,002 3,659 3,134
Adjusted total assets 68,000 63,173 58,272 54,568 45,347 40,830
Profitability Ratio
Adjusted ROA2 9.25% 9.25% 8.59% 7.33% 8.07% 7.68%

Based on: 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01), 10-K (reporting date: 2018-09-02).

2023 Calculations

1 ROA = 100 × Net income attributable to Costco ÷ Total assets
= 100 × 6,292 ÷ 68,994 = 9.12%

2 Adjusted ROA = 100 × Net income attributable to Costco ÷ Adjusted total assets
= 100 × 6,292 ÷ 68,000 = 9.25%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Costco Wholesale Corp. adjusted ROA improved from 2021 to 2022 and from 2022 to 2023.