Costco Wholesale Corp. (NASDAQ:COST)

The analysis of the financial ratios over the reported quarters reveals several notable trends in financial leverage, debt levels, and interest coverage.

Debt to Equity Ratios

The standard debt to equity ratio exhibits a gradual decline over the periods, starting from 0.49 and decreasing to around 0.22 by the latest quarter. This suggests a reduction in leverage relative to equity. A somewhat higher variation is seen during early 2020, possibly linked to market disruptions during that period, with the ratio briefly increasing to 0.54 before trending downwards consistently.

When including operating lease liabilities, the debt to equity ratio follows a similar downward trajectory but remains consistently higher than the simple debt to equity ratio, reflecting the impact of operating leases on overall leverage. The ratio peaks near 0.69 in late 2020 before declining steadily to just above 0.3 in recent quarters.

Debt to Capital Ratios

The debt to capital ratios, both excluding and including operating leases, also show downward trends. Excluding operating leases, the ratio decreases from about 0.33 to approximately 0.18, indicating a strengthening capital structure with less reliance on debt financing. Including operating leases, the ratio drops from 0.37 to 0.24, affirming a similar but slightly higher leverage level due to lease obligations.

Debt to Assets Ratios

The debt to assets ratio remains relatively low throughout the periods, decreasing modestly from around 0.15 to 0.08 excluding operating leases. When leases are considered, it declines from 0.18 to 0.11. This pattern confirms a conservative asset financing approach and decreasing debt burden relative to total asset base.

Financial Leverage

The financial leverage ratio demonstrates some variability but generally trends downward from above 3.3 towards values around 2.8, signaling reduced use of debt relative to equity. An anomalous peak at 4.05 is observed around late 2020, coinciding with the increased debt to equity ratios during that period, before a gradual return to lower levels.

Interest Coverage

This metric shows a clear and steady improvement over the available quarters, beginning around 32.77 and rising continuously to above 67 by the most recent quarter. This signifies an enhanced ability to service interest expenses, suggesting improved earnings and/or reduced borrowing costs, contributing positively to financial stability.

Overall, the data suggests a deliberate and sustained effort towards deleveraging, improving solvency, and strengthening the company’s capacity to cover interest obligations. The inclusion of operating lease liabilities notably increases leverage ratios, but the consistent downward movement in these metrics points towards prudent financial management. The marked improvement in interest coverage further underscores enhanced operational performance or favorable financing conditions over time.

Total Debt

The total debt experienced fluctuations over the analyzed periods. Initially, the debt levels were relatively stable around the 6,400 to 6,800 million US$ range between late 2018 and late 2019. A notable decrease occurred in early 2020, bringing the debt down to 5,599 million US$, followed by a sharp increase in mid-2020, peaking at 9,095 million US$. Subsequently, debt demonstrated a general downward trend with minor fluctuations, moving steadily from the 7,600 million US$ range in late 2020 to approximately 5,895 million US$ by mid-2025. Overall, the trend reveals an initial period of stability, a short-term spike, and then a gradual moderate decline in total debt.

Total Costco Stockholders’ Equity

Stockholders’ equity showed consistent growth throughout the given timeline. Starting at 13,167 million US$ in late 2018, the equity steadily increased each quarter, with only minor variations in growth rate. The value nearly doubled, reaching 27,125 million US$ by mid-2025. The progression was gradual and uninterrupted, suggesting sustained positive performance or retained earnings over the period. There was a slight slowdown in growth pace around early 2024 but the upward trend resumed quickly afterward.

Debt to Equity Ratio

The debt to equity ratio exhibited a declining trend across the timeline. Beginning at 0.49 in late 2018, the ratio decreased gradually, reaching as low as 0.22 by mid-2025. This downward trajectory indicates an improving financial leverage position with lower reliance on debt relative to equity. Some short-term fluctuations are evident, particularly the sharp rise to 0.54 in mid-2020 followed by a swift decline, corresponding with the spike and subsequent drop in total debt. Overall, the firm improved its capital structure by increasing equity faster than debt or by reducing debt levels.

Total Debt (Including Operating Lease Liability)

The total debt exhibited fluctuations from November 2018 through May 2025. Initially, the debt remained relatively stable around the 6,400 to 6,800 million USD range until September 2019, after which there was a notable increase peaking at approximately 11,630 million USD in May 2020. Subsequent quarters saw a gradual decline, stabilizing between roughly 8,130 and 9,400 million USD in the later part of the period ending May 2025. This pattern suggests a period of increased leverage around 2020 followed by deleveraging efforts.

Total Stockholders’ Equity

The stockholders’ equity demonstrated a consistent upward trend over the full timeframe. Starting at approximately 13,167 million USD in November 2018, equity increased steadily each quarter with minor volatility, reaching 27,125 million USD by May 2025. This growth in equity indicates sustained accumulation of retained earnings or capital infusions, reflecting overall company value appreciation during the analyzed period.

Debt to Equity Ratio (Including Operating Lease Liability)

The debt to equity ratio started at 0.49 in November 2018, gradually decreasing to a low of around 0.31 by May 2025, suggesting an improvement in the company’s financial leverage and solvency position across the period. Despite some transient increases, notably around early 2020 where the ratio rose to a peak of 0.69 concurrent with the debt surge, the general trend points to decreasing leverage relative to equity, indicative of a stronger balance sheet with reduced risk exposure from debt financing.

Overall Insights

Throughout the observed quarters, the company navigated a phase of heightened debt coinciding with early 2020, which may correlate with broader economic conditions or investment initiatives. Following this peak, the decreased debt levels coupled with steadily growing equity culminated in improved leverage ratios, underscoring enhanced financial stability. The consistent growth in stockholders’ equity further emphasizes a strengthening capital base, suggesting positive operational performance or successful retained earnings reinvestments during the period under review.

The analysis of the financial leverage metrics over the observed quarters reveals several noteworthy trends concerning the company's debt and capital structure.

Total Debt

Total debt exhibited moderate fluctuations throughout the periods, initially maintaining a level around US$6.4 billion in late 2018 and early 2019. A decline occurred around early 2020, reaching approximately US$5.6 billion, followed by a notable increase to a peak near US$9.1 billion by mid-2020. Subsequently, total debt generally trended downward with minor variations, settling near US$5.9 billion by early 2025.

Total Capital

Total capital showed a consistent upward trajectory from approximately US$19.6 billion in late 2018 to over US$33 billion by mid-2025, despite a noticeable dip around early 2024 when capital briefly decreased to about US$27.7 billion before recovering. This pattern indicates sustained growth in the company's capital base over the examined period.

Debt to Capital Ratio

The debt to capital ratio started at about 0.33 in late 2018, demonstrating a mild decline over the quarters, with some intermittent rises notably around mid-2020 when the ratio increased to approximately 0.35. Post mid-2020, the ratio predominantly declined, reaching 0.18 in mid-2025, reflecting a gradual reduction in financial leverage and an overall strengthening of the capital structure.

In summary, the data indicates that after a period of increased borrowing around mid-2020, the company has progressively reduced its reliance on debt relative to its capital. Concurrently, the growth in total capital suggests an expanding financial base, supporting a more robust and less leveraged financial position by the end of the analyzed timeframe.

The financial data reveals several trends in the company's leverage and capital structure over the analyzed periods. Total debt, inclusive of operating lease liabilities, exhibited fluctuations with an overall increasing trend from late 2018 through early 2020, reaching peaks above 11 billion USD. Following this period, total debt mostly stabilized and trended slightly downward through 2025, with some minor increases observed towards the later quarters.

Total capital similarly trended upwards from approximately 19.6 billion USD at the end of 2018 to a peak exceeding 35 billion USD in late 2023 and mid-2025. Some periods between late 2023 and mid-2024 indicate modest declines or plateaus but overall show steady growth in the company's capital base.

The debt-to-capital ratio, which reflects the proportion of total debt relative to total capital, initially rose from around 0.31 in early 2019 to a peak near 0.41 in mid-2020. This indicates a relatively higher leverage during that time frame. Subsequently, this ratio steadily decreased, reaching approximately 0.24 by mid-2025. This declining ratio signals a gradual reduction in leverage, suggesting the company may have focused on deleveraging or improving its capital structure by increasing equity or retaining earnings.

Total Debt Trends

Rising sharply through early 2020, peaking near 11.6 billion USD, followed by stabilization and moderate decline through 2025.

Total Capital Trends

Consistently increasing from below 20 billion USD to over 35 billion USD over the observed period, indicating capital growth.

Debt to Capital Ratio

Peaked at approximately 0.41 in 2020, then gradually declined to about 0.24 by 2025, reflecting reduced leverage over time.

Overall, the data suggests that after a period of elevated leverage around 2020, the company has taken steps to strengthen its capital structure, reducing reliance on debt relative to total capital. The consistent growth in total capital paired with a controlled or declining debt level supports enhanced financial stability and potentially improved creditworthiness in the latter years.

The data presents quarterly financial indicators reflecting the company's leverage and asset base over multiple periods from late 2018 through mid-2025. The key financial items analyzed include total debt, total assets, and the debt-to-assets ratio.

Total Debt

Total debt values exhibit some fluctuations over the analyzed period. Initial amounts were relatively stable around the 6,480 to 6,800 million USD range until early 2020. A significant increase is observed in the May 2020 quarter, reaching 9,095 million USD, followed by a decline in subsequent quarters. From late 2020 onward, total debt mostly stabilizes between approximately 5,800 and 7,000 million USD, showing minor oscillations but no sustained sharp increases or decreases.

Total Assets

Total assets show a general upward trend across the time frame. Starting near 43,800 million USD in late 2018, the asset base grows steadily with occasional dips, particularly noticeable around early 2021. Asset levels rise sharply from the mid-2023 period, culminating near 75,500 million USD by mid-2025. This steady increase reflects ongoing asset accumulation or valuation growth.

Debt to Assets Ratio

The debt-to-assets ratio remains relatively low and stable throughout the periods, fluctuating between 0.08 and 0.18. It starts around 0.15 and experiences a peak coinciding with the surge in total debt in mid-2020 (up to 0.18). Following this, the ratio steadily declines to a range of 0.08 to 0.10 from late 2023 onwards, indicating an improving leverage position with debt representing a smaller proportion of the asset base over time.

Overall, the company appears to have managed its debt carefully relative to asset growth, maintaining a conservative debt-to-assets ratio despite some variability in total debt. The strong asset growth combined with relatively stable debt levels contributes to the declining leverage ratio in the later periods. This trend suggests financial strengthening and potentially improved creditworthiness.

Total Debt (Including Operating Lease Liability)

The total debt figure exhibits fluctuations over the analyzed periods, initially around 6,480 million USD in late 2018, reaching a peak of approximately 11,630 million USD by May 2020. After this peak, a gradual decline is observed, with debt levels stabilizing between 8,100 and 9,400 million USD from early 2022 onwards. This pattern suggests a period of considerable debt increase during the early months of 2020, likely related to external factors, followed by efforts to reduce or stabilize indebtedness thereafter.

Total Assets

Total assets display a consistent upward trend throughout the timeframe. Starting at roughly 43,800 million USD in late 2018, assets increased steadily to surpass 73,000 million USD by late 2024. There are minor short-term declines or plateaus, notably around early 2021 and early 2024, but the overall trajectory indicates continuous asset growth, reflecting expansion or appreciation of resources over the period.

Debt to Assets Ratio (Including Operating Lease Liability)

The debt to assets ratio remains relatively low and shows a declining trend after an initial increase. It begins around 0.15 in late 2018 and rises slightly to 0.22 by mid-2020, coinciding with the peak in total debt. Subsequent periods exhibit a decrease in this ratio, reaching approximately 0.11 by mid-2025. This suggests that, despite fluctuations in total debt, asset growth outpaced debt accumulation over time, leading to improved leverage metrics and potentially stronger financial stability.

The total assets of the company exhibited an overall upward trend over the observed periods, with some fluctuations. Starting at approximately 43.8 billion US dollars in November 2018, the assets gradually increased, reaching a peak near 73.7 billion US dollars by November 2023. A slight decrease is noted in early 2024, followed by recovery and further growth, ending at around 75.5 billion US dollars by May 2025. This trend indicates steady expansion of the company’s asset base, with occasional minor declines that could be related to operational adjustments or market conditions.

Stockholders’ equity also showed consistent growth throughout the periods. Beginning at about 13.2 billion US dollars in late 2018, equity increased steadily to reach approximately 26.1 billion US dollars by November 2023. A notable drop occurs in early 2024 to around 20.8 billion US dollars, which then recovers and grows to roughly 27.1 billion US dollars by the last period in May 2025. This pattern suggests a generally strong position in equity financing, with a temporary reduction that might correspond with extraordinary expenses, dividend payouts, or stock repurchase activities.

The financial leverage ratio, calculated as the ratio of total assets to stockholders' equity, fluctuated between 2.75 and 4.05 during the timeframe. Initially, the ratio decreased from 3.33 to 2.98 by September 2019, indicating a relative decline in reliance on debt. Then it peaked at 4.05 in November 2020, reflecting increased leveraging, possibly due to accelerated asset growth relative to equity. Post-2020, the leverage ratio gradually declined, reaching 2.75 by September 2023, signifying a reduction in debt proportion or growth in equity. However, in early 2024, the ratio rose again to a level above 3.1 before trending downward to 2.78 by May 2025. These movements demonstrate the company’s varying strategy in balancing debt and equity financing over time, with tendencies towards maintaining moderate leverage ratios.

Overall, the data reveals a pattern of asset growth accompanied by steady increases in equity, with financial leverage exhibiting cyclical fluctuations possibly linked to strategic financing decisions. The transient drops in equity and spikes in leverage suggest episodic adjustments in capital structure, which are followed by recoveries and stabilization, consistent with prudent financial management aimed at supporting expansion while controlling financial risk.

Earnings before interest and tax (EBIT)

The EBIT value exhibits an overall upward trend from November 2018 through May 2025. Initial figures around 971 million US dollars in late 2018 gradually increase with some fluctuations, reaching peaks in several quarters such as August 2020, August 2022, September 2023, and especially in September 2024 which shows a marked high of 3162 million US dollars. The trajectory suggests periodic spikes, potentially correlating with seasonality or special operational events, but the general pattern is one of robust growth over the observed periods.

Interest expense

Interest expense figures remain relatively stable across the entire time span, fluctuating slightly between 34 million and 56 million US dollars. There are no pronounced trends of increase or decrease, indicating a stable interest-bearing debt structure or debt servicing cost throughout the quarters.

Interest coverage ratio

The interest coverage ratio demonstrates a consistent and significant increasing trend over the periods where data is available. Starting at around 32.77 in mid-2019, it increases steadily, surpassing 50 by mid-2022, and eventually reaching above 67 by May 2025. This increase indicates a strong improvement in the company's ability to meet interest obligations, reflecting increased operating earnings relative to interest expense and suggesting enhanced financial stability and creditworthiness over time.