Costco Wholesale Corp. (NASDAQ:COST)

Current Income Tax Expense

The current income tax expense demonstrates a consistent upward trend over the analyzed periods. Beginning at $1,218 million, the expense increased steadily each year, reaching $2,799 million by the most recent period. This progression indicates a growing tax liability correlating possibly with higher taxable income or changes in tax regulations impacting current tax obligations.

Deferred Income Tax Expense

The deferred income tax expense exhibits notable volatility across the years. Initially, the value decreased from $90 million to $61 million, followed by a significant shift into negative territory at -$57 million in the third period. Subsequent periods show fluctuations between positive and negative amounts, ending with a negative value of -$80 million. These variations suggest changes in temporary differences between accounting income and taxable income, possibly due to timing differences in recognizing revenues and expenses or adjustments in deferred tax assets and liabilities.

Provision for Income Taxes

The aggregate provision for income taxes, which combines current and deferred components, also shows a consistent increase from $1,308 million in the earliest period to $2,719 million in the latest. Despite the fluctuations in deferred taxes, the overall provision has risen steadily, largely influenced by the rising current tax expense.

Summary and Insights

The data reflects a robust upward trend in current tax expenses and total tax provisions, highlighting increased tax payments. Conversely, the deferred tax component is erratic, with alternating positive and negative values indicating shifts in tax timing differences or changing tax strategies. The combination of these factors results in an overall increase in the company's total income tax burden over the examined periods.

Statutory Tax Rate

The statutory tax rate remained constant at 21% throughout the evaluated periods, indicating stability in the underlying corporate tax framework.

State Taxes, Net

State taxes, net of other adjustments, showed minor fluctuations over the years. Initially at 3.6%, the rate decreased slightly to 3.4% in the third period before rising back to 3.6% in the fourth period. In the last two periods, it decreased again to 3.0% and then 3.1%, suggesting subtle shifts in state tax obligations possibly due to changes in state tax laws or income allocation.

Foreign Taxes, Net

Foreign taxes exhibited notable volatility. Starting from 1.7%, there was a decline to 1.4% in the second period, followed by a sharp increase to 3.0% in the third period. Afterward, the rate dropped to 1.9% but dipped further to 1.1% in the fifth period before rising again to 2.1%. This variability might reflect changing foreign tax rates or variations in international operations and profit allocations.

Employee Stock Ownership Plan (ESOP)

The ESOP component showed negative percentages throughout, indicating a consistent tax benefit or deduction effect. These values fluctuated, with the most pronounced impact occurring in the second period at -1.3% and a mild effect in the fourth and sixth periods at -0.3%. The fluctuations suggest varying impacts of stock compensation or related tax treatment over time.

Other

The "Other" category demonstrated irregular movements. Starting with a negative impact of -1.4%, it improved significantly to -0.7% before falling to -2.5% in the third period. Subsequently, it experienced a mild adverse effect at -0.3%, shifted to a positive 0.5% in the fifth period, and returned to -0.8%. These swings indicate various non-recurring or miscellaneous tax adjustments affecting the overall tax expense.

Effective Tax Rate

The effective tax rate generally hovered around the mid-20% range with slight fluctuations. It started at 24.4%, decreased to 24% in the second period, rose to 24.6% in the third, then climbed to 25.9% in the fourth period—the highest point observed. The rate then declined to 24.4% and increased slightly to 25.1% in the final period. This pattern illustrates a relatively stable but slightly variable tax burden, influenced by the interplay of state, foreign, ESOP, and other tax components.

The financial data reveals several notable trends and movements over the periods analyzed. There is a general upward trajectory in several key asset and liability categories, alongside fluctuations that may warrant further exploration.

Equity Compensation

The amount allocated to equity compensation shows a consistent increase from 80 million to 100 million over the period. This suggests a growing investment in employee compensation through equity incentives, which could indicate a strategic approach to employee retention and motivation.

Deferred Income/Membership Fees

This item nearly doubles from 144 million to 369 million, indicating substantial growth in prepaid revenues. This trend reflects an increasing membership base or greater advance collections, highlighting a strong recurring revenue foundation.

Foreign Tax Credit Carry Forward

An upward trajectory from 101 million to 390 million is observed, suggesting increasing foreign tax credits available to offset future tax liabilities, which may indicate expansion or greater international operations generating foreign tax credits.

Operating Lease Liabilities

Operating lease liabilities have decreased from 832 million to 699 million, reflecting a reduction in lease obligations. This could result from lease expirations, renegotiations, or shifts in asset utilization.

Accrued Liabilities and Reserves

There is a notable increase in accrued liabilities and reserves, rising steadily from 639 million to 917 million. This growth suggests a build-up in obligations or provision accruals, potentially reflecting heightened operational or contingent liabilities.

Deferred Tax Assets and Liabilities

Deferred tax assets have increased substantially from 1796 million to 2475 million, while the valuation allowance against these assets has also grown more negative, reaching -554 million. Net deferred tax assets remain relatively stable, with small fluctuations around 1600 to 1900 million. Meanwhile, deferred tax liabilities have remained fairly steady, around -1950 million to -2053 million. These movements indicate ongoing recognition of future tax benefits, tempered by a rising valuation allowance, which may signal cautious expectations about the realizability of some deferred tax assets.

Property and Equipment

Net property and equipment values show fluctuations, starting at -800 million and reaching around -944 million at the end, indicating ongoing investment and potential disposals of property and equipment assets with a slight net increase in asset base.

Merchandise Inventories

Inventory levels display variability, with an initial moderate negative figure changing sharply to -380 million before somewhat stabilizing near -300 million. This volatility could reflect changes in inventory management, purchasing patterns, or sales cycles.

Operating Lease Right-of-Use Assets

These assets have decreased consistently from -801 million to -670 million, paralleling the reduction in lease liabilities and suggesting decreasing reliance on leased properties or renegotiated lease terms.

Foreign Branch Deferreds

Values here show marginal increases in the negative direction, from -81 million to -103 million, indicating slightly greater deferred tax liabilities or timing differences associated with foreign branches.

Other Items

Some other categories show inconsistent or missing data, but identifiable entries such as an increase in a particular 'Other' asset category rising to 62 million and then declining, along with a negative swing in another 'Other' account, warrant further detailed review to clarify their impact.

Net Deferred Tax Assets (Liabilities)

Overall net deferred tax assets and liabilities fluctuate with net liabilities being recorded starting at -259 million and reducing to -132 million, indicating an improvement in the net deferred tax position.

In summary, the data illustrates strengthening in deferred income and foreign tax credits, a trend toward greater accrued liabilities, and continued management of operating leases. Growth in deferred tax assets is offset to a degree by the increasing valuation allowance. Inventory and property assets show some fluctuation, while equity compensation steadily rises. These patterns suggest a company actively managing its tax positions and lease portfolio, investing in compensations while maintaining robust recurring revenues through memberships.

Deferred Income Tax Assets

The deferred income tax assets have shown a consistent upward trend over the six-year period. Starting at 406 million USD in 2020, the value steadily increased each year, reaching 592 million USD by 2025. This represents an approximate 46% increase over the period, indicating a growing recognition of deductible temporary differences or carryforwards that may benefit the company in the future.

Deferred Income Tax Liabilities

The deferred income tax liabilities exhibited some fluctuations but remained relatively stable overall. The balance started at 665 million USD in 2020, increased to a peak of 795 million USD in 2023, and then gradually decreased to 724 million USD by 2025. While the liabilities showed some volatility, the net increase over the six years is modest at about 9%. This pattern suggests adjustments in taxable temporary differences or changes in tax positions affecting future tax payments.

Overall Insight

The contrasting trends in deferred income tax assets and liabilities suggest a strengthening position of net deferred tax assets over time. The steady increase in deferred assets combined with relatively stable liabilities may imply improving tax benefits carryforward or changes in temporary differences favorable to the company. This could positively impact future cash flows by potentially reducing future tax expenses.

The analysis of the financial data reveals consistent growth in the company’s asset base over the observed periods. Both reported and adjusted total assets have increased steadily from 2020 to 2025. The reported total assets rose from approximately $55,556 million to $77,099 million, while adjusted total assets showed a similar trend, increasing from about $55,150 million to $76,507 million. This upward trajectory indicates continuous expansion of the company's resource base over the years.

Total liabilities also displayed an increasing pattern, though at a more moderate pace compared to assets. Reported liabilities increased from $36,851 million in 2020 to $47,935 million in 2025, and adjusted liabilities followed suit, growing from approximately $36,186 million to $47,211 million within the same timeframe. This rise in liabilities corresponds with the increase in assets, implying that the company is possibly leveraging more debt or other obligations to finance its growth.

Stockholders’ equity demonstrated a positive trend, with notable fluctuations in some years. Reported equity increased from around $18,284 million in 2020 to $29,164 million in 2025, with a peak observed in 2023 at $25,058 million, followed by a slight dip in 2024 before rising again in 2025. Adjusted equity mirrors these movements closely, suggesting consistent shareholder value creation despite short-term variances.

Net income attributable to the company exhibited steady and robust growth throughout the analyzed periods. Reported net income increased from $4,002 million in 2020 to $8,099 million in 2025, effectively doubling over five years. Adjusted net income followed a comparable pattern, rising from $4,092 million to $8,019 million. This continuous improvement reflects effective operational performance and profitability enhancements over time.

Overall, the financial data reflects sustained growth in the company’s assets, equity, and profitability, with liabilities increasing moderately, indicating a balanced approach to financing its expansion and value creation for shareholders. The adjustment for deferred income taxes and other factors marginally affects the reported figures but maintains the overall trend consistency and financial health portrayal.

Net Profit Margin Trends

The reported net profit margin shows a consistent incremental growth over the periods, rising from 2.45% in 2020 to 3.00% in 2025. The adjusted net profit margin follows a similar pattern, slightly higher than the reported values initially but aligning closely by 2025. This indicates a steady improvement in profitability after accounting for deferred tax adjustments.

Total Asset Turnover Analysis

The reported total asset turnover exhibits a rising trend from 2.94 in 2020 to a peak around 3.57 in 2024, followed by a minor decrease to 3.50 in 2025. The adjusted figures closely parallel this trend but remain marginally higher throughout, suggesting efficient asset utilization that improves over time, with a slight plateau or correction towards the most recent period.

Financial Leverage Developments

Financial leverage, both reported and adjusted, shows a peak in 2021 with ratios of 3.37 and 3.29 respectively, then declines steadily to reach 2.64 (reported) and 2.61 (adjusted) by 2025. This downward trend implies a deliberate reduction in reliance on debt or increased equity financing, contributing to a more conservative capital structure over time.

Return on Equity (ROE) Observations

ROE exhibits volatility with a strong increase from 21.89% in 2020 to 28.51% in 2021, maintaining elevated levels around the high 20s through 2022 and 2023. It peaks at 31.19% reported (30.47% adjusted) in 2024 before falling back to around 27.7% in 2025. This pattern reflects fluctuating efficiency in generating shareholder returns, potentially influenced by the changes in leverage and asset utilization.

Return on Assets (ROA) Patterns

ROA consistently rises from 7.2% in 2020 to over 10.5% in 2024 and 2025 in both reported and adjusted data, indicating increasing operational efficiency and profitability relative to total assets. The adjusted ROA is slightly higher than reported in early periods but converges in the later years, highlighting the importance of tax adjustments in evaluating asset performance.

General Insights

The data suggests that the company has been improving profitability and operational efficiency steadily while reducing financial leverage. Increasing asset turnover combined with higher ROA points to effective asset management. Despite some fluctuation, ROE remains strong, supported by improved margins and controlled leverage. Deferred income tax adjustments have minimal impact on trends but provide a slightly more conservative view in most metrics.

The analysis of the financial data reveals an overall positive trend in both reported and adjusted net income attributable to the company over the examined periods. Reported net income increased steadily from $4,002 million in 2020 to $8,099 million in 2025. Similarly, adjusted net income showed growth, rising from $4,092 million in 2020 to $8,019 million in 2025.

Both reported and adjusted net profit margins demonstrated a gradual upward trajectory during the same period. The reported net profit margin improved from 2.45% in 2020 to 3.00% in 2025, while the adjusted net profit margin moved from 2.51% to 2.97%. This indicates a sustained enhancement in profitability relative to revenues.

Income Trends

There is consistent growth in net income, with reported figures showing a slightly higher absolute increase compared to adjusted figures by 2025. The difference between reported and adjusted net income remains relatively stable, suggesting limited impact from deferred income tax adjustments on net income over time.

Profit Margin Trends

Both reported and adjusted net profit margins reflect incremental improvements year-over-year. The margins remain in close alignment throughout the periods, implying that adjustments for deferred income taxes do not materially affect the profit margin ratios.

Overall Insights

The company exhibits strong financial performance characterized by steady income growth and improving profitability ratios. The sustained increases in net profit margins suggest effective cost management or pricing strategies contributing to higher profitability.

The analysis of the financial data reveals consistent growth and operational efficiency improvements over the observed periods.

Total Assets

The reported total assets have increased steadily from US$55,556 million in 2020 to US$77,099 million in 2025, indicating a continuous expansion of the company's asset base. Adjusted total assets show a similar upward trend, rising from US$55,150 million in 2020 to US$76,507 million in 2025. The slight difference between reported and adjusted values remains consistent, reflecting moderate adjustments related to income tax considerations without significantly affecting the overall asset growth pattern.

Total Asset Turnover Ratio

Both reported and adjusted total asset turnover ratios exhibit an upward trend over the years, suggesting improved efficiency in utilizing assets to generate sales. The reported ratio increased from 2.94 in 2020 to a peak of 3.57 in 2024 before a marginal decline to 3.50 in 2025. Similarly, the adjusted ratio rose from 2.96 in 2020 to a peak of 3.60 in 2024, followed by a slight decrease to 3.53 in 2025. These trends indicate enhanced asset productivity, with high turnover ratios maintained throughout the period, although the small decline in the final year may warrant further attention.

The financial data reveals an overall upward trend in both total assets and stockholders’ equity over the observed periods, indicating growth in the company's asset base as well as its equity holders’ investment. Reported total assets increased steadily from 55,556 million USD to 77,099 million USD, while adjusted total assets followed a closely similar path, rising from 55,150 million USD to 76,507 million USD. This consistency suggests that the adjustments made for deferred income tax did not significantly alter the asset valuation trends.

Regarding stockholders’ equity, the reported figures increased from 18,284 million USD to 29,164 million USD, with the adjusted values showing a comparable increase from 18,543 million USD to 29,296 million USD. This progression highlights strengthening equity and possibly accumulated earnings retained within the company.

Financial leverage ratios, serving as an indicator of the company's debt level relative to equity, showed a declining trend overall. The reported financial leverage decreased from 3.04 to 2.64, and the adjusted leverage dropped similarly from 2.97 to 2.61. This decline suggests a gradual reduction in the reliance on debt financing relative to equity, which may point to an improvement in the company's solvency and risk profile.

In summary, the data portrays a company expanding its asset base and equity while simultaneously reducing financial leverage. The closeness of reported and adjusted values throughout the periods implies that deferred income tax adjustments had a moderate impact on the financial metrics presented.

The financial data indicates a consistent upward trend in net income attributable to the company, observed in both reported and adjusted figures. Reported net income increased steadily from 4,002 million US dollars in 2020 to 8,099 million US dollars in 2025, while adjusted net income demonstrated a similar pattern, rising from 4,092 million US dollars to 8,019 million US dollars over the same period.

Total stockholders’ equity exhibited variability but generally trended upwards when adjusted for deferred income tax effects. Reported equity showed some fluctuations, rising from 18,284 million US dollars in 2020 to 29,164 million US dollars in 2025, with a decrease seen in 2024 compared to the previous year. Adjusted equity followed a comparable pattern, increasing from 18,543 million US dollars to 29,296 million US dollars, also experiencing a slight decline in 2024 before increasing again.

Return on equity (ROE) reflected moderate volatility over the periods analyzed. Reported ROE increased sharply from 21.89% in 2020 to a peak of 31.19% in 2024, before declining to 27.77% in 2025. Adjusted ROE exhibited a similar trajectory, starting at 22.07% in 2020, peaking at 30.47% in 2024, and then decreasing slightly to 27.37% in 2025. The adjustments made for deferred income taxes had a minor impact on ROE percentage points, maintaining a consistent relationship between reported and adjusted values.

Overall, the data reveals strong profitability and equity growth, with net income nearly doubling over five years and equity expanding significantly despite some interim fluctuations. The ROE figures demonstrate the company’s ability to generate returns on equity that improved through most of the period before a modest decline in the final year, suggesting a slight moderation in profitability relative to shareholder equity at that time.

The financial data over the six-year period reveals consistent growth and improvement in key performance indicators. Reported net income attributable to the company has steadily increased each year, rising from $4,002 million in the earliest period to $8,099 million in the most recent year. Adjusted net income follows a similar upward trajectory, reflecting a positive trend with slight variations between reported and adjusted figures.

Total assets, both reported and adjusted, display a continuous expansion. Reported total assets increased from $55,556 million to $77,099 million, while adjusted total assets showed a similar incremental pattern. The growing asset base suggests ongoing investment and expansion efforts.

Return on Assets (ROA), an indicator of profitability relative to asset size, demonstrates marked improvement. Reported ROA rose from 7.2% to 10.5%, indicating enhanced efficiency in utilizing assets to generate earnings. Adjusted ROA closely mirrors this trend, with a slight difference in percentages but consistent growth across the periods.

Net Income Trends

Both reported and adjusted net income increased significantly, nearly doubling from 2020 to 2025, signaling robust earnings growth.

Asset Growth

The company's asset base expanded steadily, supporting increased operational capacity and possibly reflecting capital investments or acquisitions.

Profitability (ROA)

ROA improvements indicate progressively better use of assets to generate profits, with both reported and adjusted figures showing similar positive patterns.

Reported vs Adjusted Figures

The adjusted figures generally align closely with reported data, suggesting that adjustments for tax-related items have a limited impact on the overall financial performance trends.

Overall, the data reflects a company experiencing consistent profitability growth, strengthened asset accumulation, and improved operational efficiency. The alignment between reported and adjusted measures adds credibility to the reported financial health, underscoring reliable performance improvements over time.