Costco Wholesale Corp Dr C Bulent Aybar Professor

Costco Wholesale Corp. Dr. C. Bulent Aybar Professor of International Finance

Common Size Income Statement Revenue Net sales Membership fees and other Total revenues Operating expenses Merchandise costs SG&A Preopening expenses Provision for impaired assets / closings Total operating expenses Operating income Other income (expenses) Interest expense Interest income and other Provision for merger and restructuring Income continuing ops before taxes Provision for income taxes Income before cumulative effect of accting Cumulative effect of accting, net of tax Income from continuing operations Discontinued operations Income (loss), net of tax Loss on disposal Net Income (loss) 2001 2000 1999 1998 1997 100. 00% 1. 93% 100. 00% 1. 72% 100. 00% 1. 78% 100. 00% 1. 85% 100. 00% 1. 82% 101. 82% 89. 63% 9. 17% 0. 18% 0. 05% 99. 03% 2. 91% 89. 57% 8. 72% 0. 13% 0. 02% 98. 44% 3. 28% 89. 60% 8. 67% 0. 11% 0. 21% 98. 59% 3. 19% 89. 72% 8. 69% 0. 11% 0. 03% 98. 54% 3. 30% 89. 90% 8. 74% 0. 13% 0. 35% 99. 11% 2. 70% -0. 09% 0. 13% 0. 00% 2. 94% 1. 17% 1. 76% 0. 00% 1. 76% -0. 12% 0. 17% 0. 00% 3. 33% 1. 33% 2. 00% 0. 00% 2. 00% -0. 17% 0. 16% 0. 00% 3. 18% 1. 28% 1. 91% -0. 44% 1. 47% 0. 00% 1. 47% -0. 20% 0. 11% 0. 00% 3. 21% 1. 28% 1. 93% 0. 00% 1. 93% -0. 35% 0. 07% 0. 00% 2. 42% 0. 97% 1. 45% 0. 00% 1. 45%

Benchmarking Other Ratios (millions) Costco Sears Wal-Mart BJ’s Cost of Goods Sold 30, 598 26, 322 150, 255 4, 686 Merchandise Sales 34, 137 35, 843 191, 329 5, 161 COGS 89. 60% 73. 40% 78. 50% 90. 80% Gross Margin 10. 40% 26. 60% 21. 50% 9. 20% 992 1, 178 11, 490 233 Sales 34, 797 41, 078 193, 295 5, 280 Operating Margin 2. 85% 2. 87% 5. 94% 4. 41% 602 735 6, 295 82 Sales 34, 797 41, 078 193, 295 5, 280 Net Margin 1. 73% 1. 79% 3. 26% 1. 56% Current assets 3, 882 36, 105 78, 130 753 Current liabilities 4, 112 15, 584 28, 949 625 0. 94 2. 32 2. 70 1. 20 Cost of Goods Sold 30, 598 26, 322 150, 255 4, 686 Average inventory 2, 614 5, 265 20, 618 527 Inventory Turnover 11. 7 5. 0 7. 3 8. 9 Accounts receivable 325 28, 155 1, 768 61 34, 137 35, 843 191, 329 5, 161 3 287 3 4 2, 728 7, 176 15, 092 381 30, 598 26, 322 150, 255 4, 686 33 100 37 30 Operating Income Net Income Current Ratio Merchandise Sales Average Receivables Period Accounts payable Cost of Goods Sold Average Payable Period

Profitability Assessment Profitability Ratios Net Profit Margin Gross Profit Margin Operating Margin Change in Sales Change in COGS Change in Op. Exp 2001 1. 73% 10. 17% 2. 85% 2000 1. 96% 10. 26% 3. 22% 1999 1. 45% 10. 22% 3. 13% 1998 1. 90% 10. 09% 3. 24% 7. 96% 8. 04% 14. 33% 17. 22% 17. 18% 15. 62% 13. 20% 13. 05% 15. 36% 10. 92% 10. 70% 6. 27% EBIAT/Invested Capital EBIAT Invested Capital ROIC 396, 8 414, 8 344, 0 314, 8 00 00 9, 960, 432 8, 490, 060 7, 064, 220 5, 931, 772 3. 9838% 4. 8857% 4. 8696% 5. 3070% ROE Profit Margin Asset Turnover Financial Leverage ROE 1. 73% 3. 45 2. 07 12. 33% 1. 96% 3. 73 2. 04 14. 88% 1. 45% 3. 66 2. 12 11. 24% 1. 90% 3. 88 2. 11 15. 51%

Activity Ratios Asset Turnover Receivables Management Accounts Receivables Daily Credit Sales Average Collection Period 324, 768. 00 174, 375. 00 168, 648. 00 171, 613. 00 93, 526. 03 86, 632. 88 73, 906. 85 65, 287. 67 3. 47 2. 01 2. 28 2. 63 Inventory Management COGS Inventory Turnover Days in Inventory 30, 598, 000. 00 28, 322, 000. 00 24, 170, 000. 00 21, 380, 000. 00 2, 738, 504. 00 2, 490, 088. 00 2, 210, 475. 00 1, 910, 751. 00 11. 17 11. 37 10. 93 11. 19 32. 67 32. 09 33. 38 32. 62 Fixed Asset Turnover Sales Fixed Asset FAT 34, 797, 000. 00 32, 164, 000. 00 27, 456, 000. 00 24, 270, 000. 00 5, 826, 585. 00 4, 834, 116. 00 3, 906, 888. 00 3, 395, 372. 00 5. 97 6. 65 7. 03 7. 15

Leverage Ratios Total Liabilitis Total Assets TL/TA Debt/Equity Share Price Shares Outstanding Market Value of Equity Total Liabilities/TL+MVE Interest Coverage Ratio EBIT Interest Expense ICR Number of Days in Payables A/P (COGS/365) A/P /(COGS/365) 2001 2000 1999 1998 5, 091, 016 4, 284, 803 3, 852, 111 3, 188, 460 10, 089, 786 8, 633, 940 7, 505, 001 6, 259, 820 0. 50 0. 51 1. 02 0. 99 1. 05 1. 04 34. 79 31. 62 34. 31 21. 60 475, 827 475, 737 471, 120 463, 371 16, 554, 021 15, 042, 804 16, 164, 127 10, 008, 814 0. 22 0. 19 0. 24 992 1, 037 860 787 32. 00 39. 00 45. 00 48. 00 31. 00 26. 59 19. 11 16. 40 2, 727, 639 2, 197, 139 1, 912, 632 1, 605, 533 83, 830 77, 595 66, 219 58, 575 32. 54 28. 32 28. 88 27. 41

Liquidity Ratios Current Ratio=CA/CL Quick Ratio 0. 94 0. 28 1. 02 0. 29 1. 16 0. 39 1. 20 0. 33 1. 07 0. 22