What is a company’s ability to generate income relative to revenue, balance sheet assets, operating costs, and equity?
Company (Decided): Costco Wholesale Corporation (NASDAQ: COST)
Company’s Recent Financial Statement(s): [Benafsha]
*When inserting financial statements use titles (ex. Figure 1.1) above screenshots/pictures with a description of what each is
1a. Income Statement – https://finance.yahoo.com/quote/COST/financials?p=COST
2a. Balance Sheet – https://finance.yahoo.com/quote/COST/balance-sheet?p=COST
3a. Statement of Cash Flows – https://finance.yahoo.com/quote/COST/cash-flow?p=COST
*You must provide documentation of the company’s financial information, i.e. a copy of their most recent financials (Income Statement, Balance Sheet, and Statement of Cash Flows) available in their annual report or their 10K. To find the financial statements of your company, go to their website, click on Investor Relations (or some other similar link), and download the most recent Annual Report or 10K.
Success in their industry: (brief background) [Anastacia]
2a. When/Why did the company begin –
2b. What strides had they made to increase their revenues –
Current news: [Morgan]
Ratio Analysis: (might include new product or service, recent cost cutting moves, or consolidation or merger with another company)
Liquidity: A company’s ability to repay short- & current long-term obligations.
Current ratio: short-term debt-paying ability.
Current assets / Current liabilities
Acid-test ratio: Immediate short-term debt-paying ability.
Current assets – Inventory / Current liabilities:
Efficiency: How efficiently is a company using assets and resources?
Total asset turnover: Efficiency of assets in producing sales.
Net sales / Average total assets
Inventory turnover: efficiency of inventory management
Cost of goods sold / Average inventory
Receivables turnover: efficiency of collection
Net credit sales / Average accounts receivable
Days’ sales in inventory: liquidity of inventory
365 days / Inventory turnover ratio
Days’ sales uncollected: liquidity of receivables
Accounts receivable / Net sales x 365
Profitability: What is a company’s ability to generate income relative to revenue, balance sheet assets, operating costs, and equity? Ability to provide financial rewards to attract and retain financing.
Gross margin ratio: Gross profit / Net sales
Operating margin ratio: Operating income / Net sales
Return on assets ratio: Net income / Total assets
Return on equity ratio: Net income / Shareholder’s equity
Solvency: Ability to meet long-term obligations and generate future revenues
Debt ratio: Total liabilities / Total assets :
Market Prospects: “Ability to generate positive market expectations
Book value per share ratio: Dividend per share / Share price
Dividend yield ratio: Dividend per share / Share price
Earnings per share ratio: Net earnings / Total shares outstanding
Price-earnings ratio: Share price / Earnings per share
New products/ services? [Anastacia]
5b. Cost cutting moves?
5c. Consolidation or mergers?
Tracking and analysis of stock price (suggest using excel)
*When inserting financial statements use titles (ex. Figure 1.1) above screenshots/pictures with a description of what each is
*Follow stock since the week of April 27th ?
6a. Horizontal Analysis (“Comparison of financial condition and performance across time”)
6b. Vertical Analysis (“Comparison of financial condition and performance to a base amount”)
6c. Ratio Analysis (“Measurement of key relations between financial statement items”)
6d. Equations to use for analysis:
Dollar change = analysis period amount – base period amount
Percent change (%) = (apa – bpat) / (bpa) x 100
*Rules for use of equations are on page 499 of textbook
“Looking for a Similar Assignment? Order now and Get a Discount!
The post What is a company’s ability to generate income relative to revenue, balance sheet assets, operating costs, and equity? appeared first on Premium Academic Affiliates.
