Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities, Classification
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Costco Wholesale Corp., income tax expense (benefit), continuing operations

US$ in millions

12 months ended:	Sep 3, 2023	Aug 28, 2022	Aug 29, 2021	Aug 30, 2020	Sep 1, 2019	Sep 2, 2018
Federal	1,056)	798)	718)	616)	328)	636)
State	374)	333)	265)	230)	178)	190)
Foreign	732)	851)	557)	372)	405)	487)
Current	2,162)	1,982)	1,540)	1,218)	911)	1,313)
Federal	33)	(35)	84)	77)	222)	(35)
State	10)	(5)	11)	8)	26)	22)
Foreign	(10)	(17)	(34)	5)	(98)	(37)
Deferred	33)	(57)	61)	90)	150)	(50)
Provision for income taxes	2,195)	1,925)	1,601)	1,308)	1,061)	1,263)

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).

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Item	Description	The company
Current	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Costco Wholesale Corp. current increased from 2021 to 2022 and from 2022 to 2023.
Deferred	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Costco Wholesale Corp. deferred decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.
Provision for income taxes	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Costco Wholesale Corp. provision for income taxes increased from 2021 to 2022 and from 2022 to 2023.

Costco Wholesale Corp., effective income tax rate (EITR) reconciliation

	Sep 3, 2023	Aug 28, 2022	Aug 29, 2021	Aug 30, 2020	Sep 1, 2019	Sep 2, 2018
Statutory tax rate	21.00%	21.00%	21.00%	21.00%	21.00%	25.60%
State taxes, net	3.60%	3.40%	3.60%	3.60%	3.60%	3.40%
Foreign taxes, net	1.90%	3.00%	1.40%	1.70%	0.00%	0.70%
Employee stock ownership plan (ESOP)	-0.30%	-0.30%	-1.30%	-0.50%	-0.40%	-0.30%
Other	-0.30%	-2.50%	-0.70%	-1.40%	0.70%	-1.40%
Effective tax rate, before 2017 Tax Act	25.90%	24.60%	24.00%	24.40%	24.90%	28.00%
2017 Tax Act	0.00%	0.00%	0.00%	0.00%	-2.60%	0.40%
Effective tax rate	25.90%	24.60%	24.00%	24.40%	22.30%	28.40%

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).

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Item	Description	The company
Effective tax rate, before 2017 Tax Act	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Costco Wholesale Corp. effective tax rate, before 2017 Tax Act increased from 2021 to 2022 and from 2022 to 2023.

Costco Wholesale Corp., components of deferred tax assets and liabilities

US$ in millions

	Sep 3, 2023	Aug 28, 2022	Aug 29, 2021	Aug 30, 2020	Sep 1, 2019	Sep 2, 2018
Equity compensation	89)	84)	72)	80)	74)	72)
Deferred income/membership fees	309)	302)	161)	144)	180)	136)
Foreign tax credit carry forward	250)	201)	146)	101)	65)	—)
Operating lease liabilities	678)	727)	769)	832)	—)	—)
Accrued liabilities and reserves	761)	694)	681)	639)	566)	484)
Other	20)	5)	62)	—)	—)	—)
Deferred tax assets	2,107)	2,013)	1,891)	1,796)	885)	692)
Valuation allowance	(422)	(313)	(214)	(105)	(76)	—)
Net deferred tax assets	1,685)	1,700)	1,677)	1,691)	809)	692)
Property and equipment	(867)	(962)	(935)	(800)	(677)	(478)
Merchandise inventories	(380)	(231)	(216)	(228)	(187)	(175)
Operating lease right-of-use assets	(655)	(701)	(744)	(801)	—)	—)
Foreign branch deferreds	(87)	(85)	(92)	(81)	(69)	—)
Other	—)	—)	—)	(40)	(21)	(40)
Deferred tax liabilities	(1,989)	(1,979)	(1,987)	(1,950)	(954)	(693)
Net deferred tax assets (liabilities)	(304)	(279)	(310)	(259)	(145)	(1)

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).

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Item	Description	The company
Deferred tax assets	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Costco Wholesale Corp. deferred tax assets increased from 2021 to 2022 and from 2022 to 2023.
Net deferred tax assets	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Costco Wholesale Corp. net deferred tax assets increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.
Net deferred tax assets (liabilities)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Costco Wholesale Corp. net deferred tax assets (liabilities) increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Costco Wholesale Corp., deferred tax assets and liabilities, classification

US$ in millions

		Sep 3, 2023	Aug 28, 2022	Aug 29, 2021	Aug 30, 2020	Sep 1, 2019	Sep 2, 2018
	Deferred income tax assets (included in Other long-term assets)	491)	445)	444)	406)	398)	316)
	Deferred income tax liabilities (included in Other long-term liabilities)	795)	724)	754)	665)	543)	317)

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).

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Item	Description	The company
Deferred income tax assets (included in Other long-term assets)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent.	Costco Wholesale Corp. deferred income tax assets (included in Other long-term assets) increased from 2021 to 2022 and from 2022 to 2023.
Deferred income tax liabilities (included in Other long-term liabilities)	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.	Costco Wholesale Corp. deferred income tax liabilities (included in Other long-term liabilities) decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Costco Wholesale Corp., adjustments to financial statements

US$ in millions

	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: Noncurrent deferred tax assets, net	491)	445)	444)	406)	398)	316)
Total assets (adjusted)	68,503)	63,721)	58,824)	55,150)	45,002)	40,514)
Adjustment to Total Liabilities
Total liabilities (as reported)	43,936)	43,519)	41,190)	36,851)	29,816)	27,727)
Less: Noncurrent deferred tax liabilities, net	795)	724)	754)	665)	543)	317)
Total liabilities (adjusted)	43,141)	42,795)	40,436)	36,186)	29,273)	27,410)
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: Net deferred tax assets (liabilities)	(304)	(279)	(310)	(259)	(145)	(1)
Total Costco stockholders’ equity (adjusted)	25,362)	20,921)	17,874)	18,543)	15,388)	12,800)
Adjustment to Net Income Attributable To Costco
Net income attributable to Costco (as reported)	6,292)	5,844)	5,007)	4,002)	3,659)	3,134)
Add: Deferred income tax expense (benefit)	33)	(57)	61)	90)	150)	(50)
Net income attributable to Costco (adjusted)	6,325)	5,787)	5,068)	4,092)	3,809)	3,084)

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

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Costco Wholesale Corp., adjusted financial ratios

	Sep 3, 2023	Aug 28, 2022	Aug 29, 2021	Aug 30, 2020	Sep 1, 2019	Sep 2, 2018
Net Profit Margin
Reported net profit margin	2.65%	2.62%	2.61%	2.45%	2.45%	2.26%
Adjusted net profit margin	2.66%	2.60%	2.64%	2.51%	2.55%	2.23%
Total Asset Turnover
Reported total asset turnover	3.45	3.47	3.24	2.94	3.29	3.39
Adjusted total asset turnover	3.47	3.50	3.26	2.96	3.32	3.42
Financial Leverage
Reported financial leverage	2.75	3.11	3.37	3.04	2.98	3.19
Adjusted financial leverage	2.70	3.05	3.29	2.97	2.92	3.17
Return on Equity (ROE)
Reported ROE	25.11%	28.31%	28.51%	21.89%	24.00%	24.49%
Adjusted ROE	24.94%	27.66%	28.35%	22.07%	24.75%	24.09%
Return on Assets (ROA)
Reported ROA	9.12%	9.11%	8.45%	7.20%	8.06%	7.68%
Adjusted ROA	9.23%	9.08%	8.62%	7.42%	8.46%	7.61%

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 net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Costco Wholesale Corp. adjusted net profit margin ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.
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 adjusted 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 adjusted 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

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	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)
Net sales	237,710)	222,730)	192,052)	163,220)	149,351)	138,434)
Profitability Ratio
Net profit margin¹	2.65%	2.62%	2.61%	2.45%	2.45%	2.26%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Costco	6,325)	5,787)	5,068)	4,092)	3,809)	3,084)
Net sales	237,710)	222,730)	192,052)	163,220)	149,351)	138,434)
Profitability Ratio
Adjusted net profit margin²	2.66%	2.60%	2.64%	2.51%	2.55%	2.23%

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 Net profit margin = 100 × Net income attributable to Costco ÷ Net sales
= 100 × 6,292 ÷ 237,710 = 2.65%

² Adjusted net profit margin = 100 × Adjusted net income attributable to Costco ÷ Net sales
= 100 × 6,325 ÷ 237,710 = 2.66%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Costco Wholesale Corp. adjusted net profit margin ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

	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 Deferred Taxes
Selected Financial Data (US$ in millions)
Net sales	237,710)	222,730)	192,052)	163,220)	149,351)	138,434)
Adjusted total assets	68,503)	63,721)	58,824)	55,150)	45,002)	40,514)
Activity Ratio
Adjusted total asset turnover²	3.47	3.50	3.26	2.96	3.32	3.42

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 ÷ 68,503 = 3.47

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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.

	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 Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	68,503)	63,721)	58,824)	55,150)	45,002)	40,514)
Adjusted total Costco stockholders’ equity	25,362)	20,921)	17,874)	18,543)	15,388)	12,800)
Solvency Ratio
Adjusted financial leverage²	2.70	3.05	3.29	2.97	2.92	3.17

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
= 68,503 ÷ 25,362 = 2.70

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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.

	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 Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Costco	6,325)	5,787)	5,068)	4,092)	3,809)	3,084)
Adjusted total Costco stockholders’ equity	25,362)	20,921)	17,874)	18,543)	15,388)	12,800)
Profitability Ratio
Adjusted ROE²	24.94%	27.66%	28.35%	22.07%	24.75%	24.09%

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 × Adjusted net income attributable to Costco ÷ Adjusted total Costco stockholders’ equity
= 100 × 6,325 ÷ 25,362 = 24.94%

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

	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 Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Costco	6,325)	5,787)	5,068)	4,092)	3,809)	3,084)
Adjusted total assets	68,503)	63,721)	58,824)	55,150)	45,002)	40,514)
Profitability Ratio
Adjusted ROA²	9.23%	9.08%	8.62%	7.42%	8.46%	7.61%

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 × Adjusted net income attributable to Costco ÷ Adjusted total assets
= 100 × 6,325 ÷ 68,503 = 9.23%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted 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. (NASDAQ:COST)

Analysis of Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities, Classification

Adjustments to Financial Statements: Removal of Deferred Taxes

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

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

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

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)