Group B 10 b Costco
6/18/2015
COSTCO WHOLESALE IN 2012 :
MISSION, BUSINESS MODEL, AND
STRATEGY
Group B10 – (b)
MBA/14/3633 – W.A.D. Udaya Kumara
MBA/14/3567 – H.A.D.S. Perera
MBA/14/3486 ‐ Kesharika Goonawardena
MBA/14/3444 ‐ Darshani R.K.N.D
Question 1 : How well is Costco performing from a financial perspective ?
Illustrate your answer by using key financial ratios.
Financial Ratio Groups
Profitability
Ratios
Liquidity
Ratios
Leverage
Ratios
Investor
Ratios
1
6/18/2015
Profitability
Ratios
Costco Growth Strategy :
To achieve 5% sales growth
Source : Authors
Source : Authors
Costco has maintained a higher revenue growth compared to itscompetitors . Costco has achieved financial objectives in terms of revenue growth, during the
Source : Authors
last two years
Profitability
Ratios
Costco gross profit margin has come down in 2011, despite revenue growth of 14% reported the same year.
Source : Authors
This is mainly due to the low increase of membership fee.
Source : Authors
2
6/18/2015
Profitability
Ratios
Shows the profitability of the current operations without regard to interest charges and income tax
Source : Authors
In 2011 –
Costco has a slightly increased operating profit ratio, since Costco is more towards maintaining
Best Cost
Best cost
Provider
provider
“Best Cost Strategy “ with low price tags and high quality differentiated products.
Profitability
Ratios
Source : Authors
Costco maintaining a net profit margin of 1.6% in 2011.
Main contributor to this is membership fee 2011 Membership Fee
= $ 1,867 Bn Net profit after tax
= $ 1,462 Bn
3
6/18/2015
Profitability
Ratios
Source : Authors
Source : Authors
ROE ‐ of the Costco is slightly on the declining trend. This indicates decrease in shareholder value
ROA and ROCE‐ also slightly declining , need new strategy focus.
COSTCO WHOLESALE IN 2012 :
MISSION, BUSINESS MODEL, AND
STRATEGY
Group B10 – (b)
MBA/14/3633 – W.A.D. Udaya Kumara
MBA/14/3567 – H.A.D.S. Perera
MBA/14/3486 ‐ Kesharika Goonawardena
MBA/14/3444 ‐ Darshani R.K.N.D
Question 1 : How well is Costco performing from a financial perspective ?
Illustrate your answer by using key financial ratios.
Financial Ratio Groups
Profitability
Ratios
Liquidity
Ratios
Leverage
Ratios
Investor
Ratios
1
6/18/2015
Profitability
Ratios
Costco Growth Strategy :
To achieve 5% sales growth
Source : Authors
Source : Authors
Costco has maintained a higher revenue growth compared to itscompetitors . Costco has achieved financial objectives in terms of revenue growth, during the
Source : Authors
last two years
Profitability
Ratios
Costco gross profit margin has come down in 2011, despite revenue growth of 14% reported the same year.
Source : Authors
This is mainly due to the low increase of membership fee.
Source : Authors
2
6/18/2015
Profitability
Ratios
Shows the profitability of the current operations without regard to interest charges and income tax
Source : Authors
In 2011 –
Costco has a slightly increased operating profit ratio, since Costco is more towards maintaining
Best Cost
Best cost
Provider
provider
“Best Cost Strategy “ with low price tags and high quality differentiated products.
Profitability
Ratios
Source : Authors
Costco maintaining a net profit margin of 1.6% in 2011.
Main contributor to this is membership fee 2011 Membership Fee
= $ 1,867 Bn Net profit after tax
= $ 1,462 Bn
3
6/18/2015
Profitability
Ratios
Source : Authors
Source : Authors
ROE ‐ of the Costco is slightly on the declining trend. This indicates decrease in shareholder value
ROA and ROCE‐ also slightly declining , need new strategy focus.