Costco Wholesale Corp. (NASDAQ:COST)

The analysis of the annual financial ratios reveals several notable trends and variations over the six-year period from 2019 to 2024.

Net Fixed Asset Turnover

The net fixed asset turnover ratio demonstrated a consistent upward trajectory from 7.03 in 2019 to a peak of 8.49 in 2023, indicating an improving efficiency in utilizing fixed assets to generate sales. However, a slight decline to 8.19 was observed in 2024, suggesting a small reduction in asset utilization efficiency in the most recent period.

Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)

When factoring in operating leases and right-of-use assets, the turnover ratio started at the same level as the standard net fixed asset turnover in 2019 (7.03) but then showed a decline to 6.48 in 2020. Following this drop, a gradual recovery occurred over the next years, reaching 7.74 in 2023, before a minor decrease to 7.55 in 2024. This pattern suggests that the inclusion of lease assets initially impacted asset efficiency metrics negatively, but subsequent improvements partially mitigated this effect.

Total Asset Turnover

The total asset turnover ratio decreased from 3.29 in 2019 to 2.94 in 2020, indicating lower efficiency in using total assets to generate revenue during that year. However, from 2021 onwards, the ratio showed a steady increase, peaking at 3.57 in 2024. This recovering trend points toward improved overall asset utilization efficiency in recent years.

Equity Turnover

Equity turnover followed a fluctuating trend, starting at 9.8 in 2019, then decreasing to 8.93 in 2020. It rose sharply to 10.93 in 2021, maintaining a similar level at 10.79 in 2022. However, a decline was seen in 2023, with the ratio falling to 9.49, before rebounding to 10.57 in 2024. This variability may reflect changes in sales relative to shareholders’ equity, possibly indicating shifts in capital structure or operational leverage during the period.

Net Sales

Net sales displayed a consistent upward trend throughout the periods, increasing from 149,351 million US dollars in 2019 to 249,625 million US dollars in 2024. The increase was steady each year, with the most significant growth observed between 2020 and 2021, and a continued but slightly decelerated rise in the last year from 2023 to 2024.

Property and Equipment, Net

The net value of property and equipment, including finance lease right-of-use assets, showed a regular increase over the years under review. Starting at 21,241 million US dollars in 2019, the figure grew annually to reach 30,465 million US dollars by 2024. The growth reflects ongoing investment and asset accumulation, with a relatively steady pace of increase each year.

Net Fixed Asset Turnover Ratio

The net fixed asset turnover ratio demonstrated an improving efficiency in utilizing fixed assets to generate sales from 2019 through 2023. The ratio increased from 7.03 in 2019, peaking at 8.49 in 2023, indicating enhanced productivity or better asset management. However, in 2024, there was a slight decline to 8.19, suggesting a minor reduction in asset utilization efficiency compared to the previous year.

Net Sales

Net sales have shown a consistent upward trend over the observed periods, increasing from 149,351 million USD in 2019 to 249,625 million USD in 2024. This represents a substantial growth of approximately 67% over six years, highlighting strong revenue expansion and potentially increasing market share or improved sales performance.

Property and Equipment, Net (Including Finance Lease Right-of-Use Assets)

The net value of property and equipment, including right-of-use assets, has steadily increased from 21,241 million USD in 2019 to 33,082 million USD in 2024. This growth indicates ongoing capital investment and asset base expansion, which may support the reported sales growth and operational capacity enhancements.

Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)

The net fixed asset turnover ratio experienced a slight decline from 7.03 in 2019 to 6.48 in 2020, possibly reflecting the initial impact of increased asset investment or operational challenges. However, the ratio rebounded in subsequent years, reaching a peak of 7.74 in 2023 before a minor decrease to 7.55 in 2024. Overall, the ratio remains relatively stable at a high level, indicating effective utilization of fixed assets to generate sales despite asset growth.

The analysis of the annual financial data reveals several noteworthy trends in the company's performance over the period from 2019 to 2024.

Net Sales

There is a consistent upward trend in net sales across the reported years. Starting at US$149,351 million in 2019, sales increased steadily each year, reaching US$249,625 million in 2024. This represents a significant overall growth, indicating a strong increase in revenue generation over the six-year span.

Total Assets

Total assets have also shown a persistent increase year over year. The asset base grew from US$45,400 million in 2019 to US$69,831 million in 2024. This growth in assets suggests ongoing investment in the company’s resource base and capacity expansion to support the rising sales volume.

Total Asset Turnover

The total asset turnover ratio, which measures the efficiency of using assets to generate sales, fluctuated somewhat but exhibited an overall positive trend. It started at 3.29 in 2019, declined to 2.94 in 2020, rebounded to 3.24 in 2021, and progressively increased to 3.57 by 2024. This implies that despite the expansion in asset size, the company has improved its effectiveness in utilizing those assets to produce revenue, particularly after 2020.

Overall, the data suggests a company experiencing robust growth in sales and assets, while enhancing asset utilization efficiency. The temporary dip in asset turnover in 2020 may reflect external conditions or investment changes; however, the subsequent recovery and increase indicate effective management and operational improvements.

Net Sales

Net sales showed a consistent upward trend over the periods analyzed, increasing steadily from $149,351 million in the year ending September 1, 2019, to $249,625 million by the year ending September 1, 2024. This represents a significant growth of approximately 67% over six years, indicating strong revenue expansion and successful business operations.

Total Costco Stockholders’ Equity

The total stockholders' equity displayed a generally increasing pattern but with some fluctuations. Starting at $15,243 million in 2019, it rose to $18,284 million in 2020, then experienced a slight decline to $17,564 million in 2021. Subsequently, equity increased notably to $25,058 million by 2023 before a moderate decline to $23,622 million in 2024. Despite the minor decreases, the overall trend indicates growth in the equity base over the analyzed period.

Equity Turnover Ratio

The equity turnover ratio, which measures the efficiency of equity use to generate sales, fluctuated moderately across the years. It started at 9.8 in 2019, decreased to 8.93 in 2020, then increased sharply to 10.93 in 2021. Following a slight decrease to 10.79 in 2022, it went down further to 9.49 in 2023, before increasing again to 10.57 in 2024. This variability suggests periods of differing operational efficiency but generally shows Costco's strong capability to generate revenues relative to its equity.

Summary Insights

Overall, the financial data indicate robust growth in sales revenue coupled with a growth in equity over the reviewed period. The fluctuations in equity turnover ratio imply some variability in capital efficiency but generally reflect effective use of equity to drive sales. The interplay between rising net sales and fluctuating equity points to strategic investments and management decisions impacting equity levels while maintaining strong sales performance.