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

2. 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)

3. 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

5. 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%

6. 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

7. 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

8. 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