Costco Wholesale Corporation

Part 1

Costco Wholesale Corporation (Costco or "the company") operates an international chain of membership warehouses, mainly under the "Costco Wholesale" brand name. The company offers a limited selection of nationally branded and selected private-label products across a wide range of merchandise categories at lower prices. Costco has operations in the US, Puerto Rico, Canada, the UK, Korea, Taiwan, Japan, Mexico and Australia. The company is headquartered in Issaquah, Washington and employed about 164,000 people, of which 72,000 were part-time employees as of August 28, 2011.

Year over year, Costco Wholesale Corporation has been able to grow revenues from $77.9B to $88.9B. Most impressively, the company has been able to reduce the percentage of sales devoted to selling, general and administrative costs from 10.12% to 9.82%. This was a driver that led to a bottom line growth from $1.3B to $1.5B.

Costco’s overview performance is mixed. The last four years, the return on sales remained constant at 3% in the U.S., 4% in Canada, and other foreign operations shows 1% return in 2003 and an increase to 2% in the last three years. This ratio shows the profitability of the different geographic locations of the firm, without taking into account interest or taxes. Since 2004, the return on sales from international endeavors has-been equal to the U.S. return on sales. This indicates that national and international ventures are equal in profitability of current operations. Market research indicates that the mean income of a Costco consumer is $75,000, with30% of its members making $100,000 or more. This means that Costco consumers are more affluent than the members of the other clubs.

Part 2

Locate the most recent annual report of your chosen company. Your group will need to review the major sections of this report in order to familiarize yourselves with the content of each of the financial statements and appropriate footnotes

2011 2010 differential