This paper analyses Costco annual reports for the year ended August 31, 2010 and gives reasons why an investor should make this firm his choice. Summary of the CEO letter to shareholders In this letter, the top officials are very optimistic about the year 2010, having been disappointed by the past two years. Though the year 2010 was characterized by fragile economic conditions in most of their markets, the year produced a record in terms of sales and earnings. This record sale is seen by Costco’s achievement of $7.63 billion sales in 2010 up from $69.9 billion sales in 2009, a net earning of $1.3 billion, and an eighteen percent increase in earning per share. Despite the uncertainty in the economy in 2010, members who shopped in the Costco warehouses increased by four percent spending three percent more than they did in 2009.
Return on asset gives an idea as to how efficiently company is to generate revenue by using assets. Comparing the ratios, it is obvious that return on asset declined over these years. In 2010, the ROA was 7.07% indicating that every dollar in asset generated about seven cents in profit, which is reletive high compared to that in 2013 where every dollar in asset gererated 0.75 cent. Return on equity generally measures that the amount of profit generate relevant with how much shareholders invest. Amazon had a lower ROE in year 2013 compared to year 2010, which illustrated that every dollar shareholders invested generated lower net income.
Lucent's third-quarter earnings will improve significantly, while sales will see a modest increase. Stronger-than-expected revenue and a stabilized balance sheet led Salomon Smith Barney analyst Alex Henderson to upgrade his rating on the stock to outperform from neutral. He said the company looks on track to break even within the year. All results excluded Lucent's former Agere optical components unit, which was partly spun off recently and reported its second-quarter results separately on Tuesday. Lucent also said losses for its Winstar Communications loans and other write-offs totaled 15 cents per share.
The biggest decline was seen is accounts payable which decreased by $170,500 to $230,000, a decline of 42.6 %. Activity: The inventory turnover is almost half compared to the industry average, although it managed to increase by 0.3 compared to 2002. The company needs to maintain a constant cost of goods sold and at the same time manage inventory more efficiently to maintain market competitiveness. The average collection period also increased slightly to 58 days, three days increase compared to 2002. The company needs to negotiate or persuade on efficient payment methods to customers to decrease the collection period down to industry average.
www.planware.org This management of working capital will allow the company to maximize its use of existing cash flows as well as leverage additional sources of working capital. Underperforming Company Ratios Although Wal-Mart is performing well overall and remains a leader within the retail industry, the company is not without opportunities for improvement. An analysis of the financial ratios for the company over the last three years as well as an industry comparison has identified areas in which the company could enhance its ... ... middle of paper ... ... 3.03 3.26 3.59 Payout Ratio_______________________.19__________.17__________.23____ Table B Industry Averages_____________________________________________________ Fiscal Year 2001 2002 2003____ Leverage Debt Ratio 1.58 2.2 .53 Times Interest Earned Ratio .75 1.78 2.46 Liquidity Current Ratio 3.1 2.8 2.6 Quick Ratio .6 .5 .4 Net Working Capital .195 .07 .195 Efficiency Asset Turnover Ratio 2.23 2.27 2.2 Average Collection Period 12.6 10.4 8 Inventory Turnover 5.24 5.38 5.73 Profitability Net Profit Margin 3.7 2.8 3.97 Payout Ratio_______________________ 32.4__________34.3________34.6___ Tables are a combination of the following resources: www.walmart.com, www.reuter.com, www.biz.yahoo.com, UOP library resource Dun and Bradstreet industry ratios, and www.bloomberg.com.
The EXXON Mobil Company Cash Availability and Debts (in Mil $) According to the Balance sheet as on 2002, the current assets of the company’s current assets= 38,291 as compared to current liabilities which are 33,175 which means they have current assets... ... middle of paper ... ... company’s financial statements it is obvious that Net income for consecutive three years is following an upward trend and therefore growth is accelerating on consistent basis. Cash flow from operating activities, which fell last year by 1,938 (000 $) have boosted this year to 165,613. But still the company’s current assets fall well short of its current liabilities. For this reason we have assigned ‘B-Grade’ to your company after analyzing its financial statements of the year 2002. References Microsoft Corporation analysis made from ‘Microsoft Annual Report 2002 & Form 10-K’ Exxon Mobil Company’s analysis retrieved from the ‘Summary Financial Reports 2002’ from www.exxonmobil.com on 14/05/2003 http://www.argosycasinos.com/corporate/investor_information2/02_annualreport/operations.html for Argosy Gaming Company’s financial information, retrieved on 14/05/2003
A company’s financial statements also reflect the history in the financial information of the entity. The financial history is still important because in order to solve a p... ... middle of paper ... ...rent new products and open up new markets with stronger business practices. If I were to encourage people to invest into this company I would start off by self-promoting the company by using effective marketing skills/suggestive selling. I would go out and execute demonstrations on the products that the company is trying to sell or pass out brochures which will give the potential investors a walk through about the company’s values and its goals. I would come up with a well-developed business plan and present it to potential investors explaining how I intend to make the company profitable.
March, however, was the highest revenue generating month all quarter. SDS has focused their efforts to increase revenues by selling the available hours that are available to other companies to turn a higher profit. In order to achieve higher sales and increase profits, Salem needs to focus its efforts on sales promotion. The extra revenue will cover the fixed costs and improve the profit outlook.
Conversely, his historical records of investment success do add value to shareholders trust. Was the bid price appropriate? GEICO Corp was selling for $55.75 at the time Warren Buffet and Berkshire Hathaway made an offer of $70 including a 26% premium over the current GEICO stock price. One would expect that what appeared to be an overprice bid would lead to a negative market reaction. On the contrary, Berkshire Hathaway’s shares closed up 2.4% for the day for a gain in market value of $718 million after the announcement.
Ralph Lauren (RL), the world’s premier luxury lifestyle brand, is considerably lagging its industry peers of late. In the last 12 months, the stock has declined approximated 4.2% whereas most of its peers have managed high double-digit returns. However, considering its growth strategies, recent earnings-beat, bullish future outlook and general industry trends, Ralph Lauren has all the qualities a good investment should possess. Solid Q3 earnings and improved guidance Driven by a strong top-line performance along with leveraged selling, general and administrative (SG&A), Ralph Lauren earnings per diluted share surged 11% to $2.57 in the fiscal-third quarter. The company’s net revenues increased 9.2% to $2 billion.