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

Common Size Income Statement 2001 2000 1999 1998 1997 Revenue Net sales 100.00% Membership fees and other 1.93% 1.72% 1.78% 1.85% 1.82% Total revenues 101.93% 101.72% 101.78% 101.85% 101.82% Operating expenses Merchandise costs 89.63% 89.57% 89.60% 89.72% 89.90% SG&A 9.17% 8.72% 8.67% 8.69% 8.74% Preopening expenses 0.18% 0.13% 0.11% Provision for impaired assets / closings 0.05% 0.02% 0.21% 0.03% 0.35% Total operating expenses 99.03% 98.44% 98.59% 98.54% 99.11% Operating income 2.91% 3.28% 3.19% 3.30% 2.70% Other income (expenses) Interest expense -0.09% -0.12% -0.17% -0.20% -0.35% Interest income and other 0.17% 0.16% 0.07% Provision for merger and restructuring 0.00% Income continuing ops before taxes 2.94% 3.33% 3.18% 3.21% 2.42% Provision for income taxes 1.17% 1.33% 1.28% 0.97% Income before cumulative effect of accting 1.76% 2.00% 1.91% 1.45% Cumulative effect of accting, net of tax -0.44% Income from continuing operations 1.47% Discontinued operations Income (loss), net of tax Loss on disposal Net Income (loss)

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% Operating Income 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% Net Income 602 735 6,295 82 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 Current Ratio 0.94 2.32 2.70 1.20 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 Average Receivables Period 3 287 4 Accounts payable 2,728 7,176 15,092 381 Average Payable Period 33 100 37 30

Profitability Assessment Profitability Ratios 2001 2000 1999 1998 Net Profit Margin 1.73% 1.96% 1.45% 1.90% Gross Profit Margin 10.17% 10.26% 10.22% 10.09% Operating Margin 2.85% 3.22% 3.13% 3.24% Change in Sales 7.96% 17.22% 13.20% 10.92% Change in COGS 8.04% 17.18% 13.05% 10.70% Change in OpExp 14.33% 15.62% 15.36% 6.27% EBIAT/Invested Capital EBIAT 396,800 414,800 344,000 314,800 Invested Capital 9,960,432 8,490,060 7,064,220 5,931,772 ROIC 3.9838% 4.8857% 4.8696% 5.3070% ROE Profit Margin Asset Turnover 3.45 3.73 3.66 3.88 Financial Leverage 2.07 2.04 2.12 2.11 12.33% 14.88% 11.24% 15.51%

Activity Ratios Activity Ratios Asset Turnover Receivables Management   Asset Turnover Receivables Management Accounts Receivables 324,768.00 174,375.00 168,648.00 171,613.00 Daily Credit Sales 93,526.03 86,632.88 73,906.85 65,287.67 Average Collection Period 3.47 2.01 2.28 2.63 Inventory Management COGS 30,598,000.00 28,322,000.00 24,170,000.00 21,380,000.00 Inventory 2,738,504.00 2,490,088.00 2,210,475.00 1,910,751.00 Inventory Turnover 11.17 11.37 10.93 11.19 Days in Inventory 32.67 32.09 33.38 32.62 Fixed Asset Turnover Sales 34,797,000.00 32,164,000.00 27,456,000.00 24,270,000.00 Fixed Asset 5,826,585.00 4,834,116.00 3,906,888.00 3,395,372.00 FAT 5.97 6.65 7.03 7.15

Leverage Ratios Leverage Ratios Total Liabilitis Total Assets TL/TA 2001 2000 1999 1998 Total Liabilitis 5,091,016 4,284,803 3,852,111 3,188,460 Total Assets 10,089,786 8,633,940 7,505,001 6,259,820 TL/TA 0.50 0.51 Debt/Equity 1.02 0.99 1.05 1.04 Share Price 34.79 31.62 34.31 21.60 Shares Outstanding 475,827 475,737 471,120 463,371 Market Value of Equity 16,554,021 15,042,804 16,164,127 10,008,814 Total Liabilities/TL+MVE 0.24 0.22 0.19 Interest Coverage Ratio EBIT 992 1,037 860 787 Interest Expense 32.00 39.00 45.00 48.00 ICR 31.00 26.59 19.11 16.40 Number of Days in Payables A/P 2,727,639 2,197,139 1,912,632 1,605,533 (COGS/365) 83,830 77,595 66,219 58,575 A/P /(COGS/365) 32.54 28.32 28.88 27.41

Liquidity Ratios Liquidity Ratios Current Ratio=CA/CL 0.94 1.02 1.16 1.20 1.07 Quick Ratio 0.28 0.29 0.39 0.33 0.22