Costco Wholesale Corporation Pro Forma Statement of Cash Flows

The provided document is a pro forma statement of cash flows for Costco Wholesale Corporation (COST) for the fiscal years ending 08/31. It includes various financial metrics such as net income, cash flows from operating activities, depreciation and amortization, capital expenditures, dividend paid, sale and purchase of stock, other shareholder's equity, effects of exchange rates, net change in cash and cash equivalents, and free cash flow. The document provides a comprehensive overview of the company's financial performance and position.

Running Head: Finance
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Project Report: Finance

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Executive summary:
The report has been prepared to evaluate the financial performance and position of an
organization, COSTCO WHOLSALE CORP. In the report, financial performance of Costco
Wholesale Corporation has been evaluated on the basis of horizontal analysis and the vertical
analysis and significantly, the prediction about the future performance of the company has
been done on the basis of current trend and the position of the company in terms of finance.
The report expresses that the level of the company in terms of financial position of the
company is quite better as it offers the long term profit to the company. The evaluation and
analysis explains that the financial performance and the position of the company are quite
strong and the pro-forma also explains about better changes into the organization. It explains
that the company is quite viable.

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Contents
Introduction.......................................................................................................................4
Company overview...........................................................................................................4
Review of literature..........................................................................................................4
Structural framework........................................................................................................6
Regression analysis.......................................................................................................6
Alternative estimation techniques.................................................................................6
Derivation of pro-forma................................................................................................6
Analysis of findings..........................................................................................................7
Summary and conclusion..................................................................................................8
References.........................................................................................................................9
Appendix.........................................................................................................................11

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Introduction:
Financial analysis is a process to manage and identify the performance of an
organization in terms of financial transactions. Financial analysis is a process which evaluates
the current position of the company as well as it explains about the future performance of the
company. There are various techniques through which the financial performance of the
company could be evaluated and the financial projection of the company could be done. In
the report, financial performance of Costco Wholesale Corporation has been evaluated on the
basis of horizontal analysis and the vertical analysis and significantly, the prediction about
the future performance of the company has been done on the basis of current trend and the
position of the company in terms of finance.
Company overview:
Costco Wholesale Corporation is an American company which is operating its
business at international level. The main operations of the company are operated through
chain of membership at warehouse club. The company has been awarded as world’s largest
retailing company in terms of organic food, chicken, wine, choice and prime beef etc.
Headquarter of the company is at Issaquah in Washington (History, 2018). Currently,
company has ownership over 741 warehouses. Main brand of the company is Kirkland
Signature. 2,31,000 people are employed by the company. The current annual report of the
company states that the turnover and the total net profit of the company is US $ 129 billion
and US $ 2.679 billion. It explains that the financial position of the company is quite viable.
Review of literature:
Gamble & Thompson, (2014) has explained into his study that financial analysis is
one of the best processes to analyze the projection of a company. Further, it has been added
by Baker (2016) into his study that financial analysis makes it easy for the management and
the investors of the company to make better conclusion about the position of the company.
Bloomberg (2018) explains that the financial position and performance of an organization
could be evaluated on the basis of various techniques. FT (2018) explains about the financial
position and performance of Costco Wholesale Corporation. In his study, he briefed that the
position of the company is quite strong in terms of finance. The margin level and the market
level of the company have been better in context with the last 10 years. Further, it has been
explained by Yahoo Finance (2018) that the market position of the company has been bit

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lower due to various changes into the economy position and well as the changes into the
industry. It has also been found that the main competitors of the company are Sam’s club and
BJ’s wholesale. BJ’s wholesale has the highest market ratio among the main three
competitors. On the basis of it, NASDAQ (2018) explains that the organization should invest
into the BJ’s wholesale rather than Costco Wholesale Corp. Though, Borysov, Roudi &
Balatsky, (2015) has briefed into his paper that the market share is not the only measurement
to evaluate the financial performance and position of the company. It only measures the
market base of the company and it is not a predictable and reliable data to project the future
performance of any organization.
Further, the study of Morningstar (2018) about the American market, NASADQ and
Costco Wholesale Corp explains that the company is one of the best companies in American
market to make an investment. The future prediction about the company briefs that the
position and the performance of the company is bit better in the industry. The financial ratios
of the company also briefs that the various positive changes have occurred into the financial
strength and position of the company (Sullivan & Gouldson, 2016). The current trend of the
company explains about a better projection and trend in near future.
The profitability and financial ratios are the measurements to identify and evaluate the
level of profit generation capability of an organization as well as the current financial position
of the company at internal level and external level as well (Investors relation, 2018). Through
the evaluation on the financial statement of the company, it has been found that the position
of the company has better from last 10 years and in future, the position of the corporation
would be much better. The growth ratio of the company briefs about the growth rate of the
company in last 10 years. Through the evaluation on the financial statement of the company,
it has been generated that the financial strategy of the company is quite strong.
MSN money (2018) has focused on the dividend strategy of the company to generate
and manage the dividend against the net profit of the company. The dividend level of the
company is quite better and it attracts the various investors to invest into the organization so
that the good level of return could be got. It has also impacted on the market value of the
stock of the company. The current price of the company is $ 186.45 which is quite higher
than the book value of the company (FT, 2018). It expresses about the better market position
of the company in the industry as well as in the market.

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In addition, various financial analysts have briefed into their study and articles that the
position of the company is quite string and various revolutionary changes have take lace into
the industry due to Costco Wholesale Corp (NASDAQ, 2018). It also briefs that the retention
rate and he return on equity level of the company is quite better. Internal growth rate of the
company has also been higher from last 3 years which explains that the financial position of
the company is quite stable (FT, 2018). The current annual report of the company states that
the turnover and the total net profit of the company is US $ 129 billion and US $ 2.679
billion. It explains that the financial position of the company is quite viable (Morningstar,
2018).
Structural framework:
Structural framework assists an organization to identify the level of profitability,
financial performance, strength of the company etc to make a better conclusion about the
position of the company. Financial structural framework is used by the companies to run the
operations of the company efficiently and effectively. It evaluates the revenues, net profit,
equity short and long term assets, liabilities etc to identify the position of the company, tee
structural framework study has been done on the Costco Wholesale Corporation to evaluate
and identify the level of the company and the performance of the company in near future.
Regression analysis:
Regression analysis is a process which evaluates the data of an organization to
identify the future prediction and current trend about the performance of the company. This
technique makes it easier for the company as well as the management of the company to
evaluate the performance and the position of the company. The regression analysis study has
been done on Costco Wholesale Corporation to identify the future prediction of total turnover
of the company. The regression analysis table of the company is as follows:
Models BIAS MAD MSE MAPE
Trend 0.00 2.29 8.67 0.05
Naïve 1.55 4.45 26.09 0.09
Moving Avg 2.56 3.96 25.85 0.08
Exponential
Smoothing 2.57 3.85 23.48 0.08
Holt's 0.91 3.73 19.78 0.08

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The above model explains that the future prediction and the position of sales of the
company are quite strong. It explains that the level of the company is way better in current
scenario as well as in future scenario. It also explains that the future investment into the
company would offer huge returns to the stakeholders of the company. The regression
analysis calculations of the company briefs that the position of the company is better as well
as the company are financially viable.
Alternative estimation techniques:
There are various other techniques to evaluate the performance and ensures the
changes into the organization as well as predict the future changes of the organization.
Growth analysis is a process which evaluates the data of an organization to identify the future
prediction and current changes into the performance of the company. This technique makes it
easier for the company as well as the management of the company to evaluate the
performance and the position of the company. The growth analysis study has been done on
Costco Wholesale Corporation to identify the future prediction of total turnover of the
company (Courtemanche & Carden, 2014).
The growth ratio of the company briefs about the growth rate of the company in last
10 years. Through the evaluation on the financial statement of the company, it has been
generated that the financial strategy of the company is quite strong and it also explains that
the positive changes would take place into the financial statements of the company in next
future years.
The growth model and calculation explains that the future prediction and the position
of financial position of the company are quite strong. It explains that the level of the company
is way better in current scenario as well as in future scenario (Baker, 2016). It also explains
that the future investment into the company would offer huge returns to the stakeholders of
the company. The growth rate analysis and calculations of the company briefs that the
position of the company is better as well as the company are financially viable.
Derivation of pro-forma:
Basically, the pro-forma of the company has been generated and prepared on the basis of the
trend analysis and growth rate analysis. The pro forma of the company has been prepared
after evaluating the financial statement of last year and measuring the trend changes of the
organization from last 3 years. The pro forma calculations of the comapny explains that the

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various changes would be taken place into the income statement, statement of financial
position and statement of cash flows of the company. The pro-forma of income statement of
the company has been prepared and evaluated on the basis of trend analysis and the changes
into the revenue of the company in last 10 years. It has been evaluated through the study that
the changes into the financial performance of the company would be positive and it would
attracted more investors towards the comapny to make investment (Gamble & Thompson,
2014).
Further, pro-forma of balance sheet has been evaluated on the basis of income
statement of the company and the balance sheet of the company of last 3 years. The pro-
forma of balance sheet of the company expresses that the changes into the financial
performance of the company would be positive and it would attract more investors towards
the comapny to make investment.
Lastly, the cash flow statement of the company has been evaluated and analyzed on
the basis of the financial statements i.e. income statement and balance sheet of the company
and the position of the company explains that the future performance of the company is quite
better in current scenario (Gornall & Strebulaev, 2015).
Analysis of findings:
The above study and findings explain that the position of the company would be much
better in near future. The current data and the trend of the company and the industry are quite
better and it explains that the level of the comapny would be better in near future. The income
statement of the company explains that the turnover level of the company would be enhanced
and due to the turnover or sales level, the net profit of the company would also be better. It
would directly enhance the profit generation capaibility of the company. Further, the other
financial statement of the company has also been studied and it has been recognized that the
level of the company would be better in terms of capital management, assets and financial
strength of the company (Appendix).
The balance sheet of the company of last 3 years has been evaluated to identify the
performance of company in next 3 years. The pro-forma of balance sheet of the company
expresses that the changes into the financial performance of the company would be positive
and it would attract more investors towards the comapny to make investment (Appendix). It

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would also affect the level of the company and the performance of the company in terms of
financial transaction and the level of the company.
Lastly, the cash flow statement of the company of last 3 years has been evaluated to
identify the performance of company in next 3 years (Appendix). The pro-forma of cash flow
statement of the company expresses that the changes into the cash inflow and outflow of the
company would be in the favour of the organization. The level of free cash inflow of the
company would be better as the growth rate of the company is 9% (Appendix). It would also
affect the level of the company and the performance of the company in terms of financial
transaction and the level of the company. The above evaluation and analysis explains that the
financial performance and the position of the company are quite strong and the pro-forma
also explains about better changes into the organization (Appendix). It explains that the
company is quite viable.
Summary and conclusion:
To conclude, the financial position and performance of the company would be quite
better in near future and thus the company is a good choice for the inventors to invest into. It
would offer the long term as well as short term profit to the company. According to the
report, financial performance of Costco Wholesale Corporation explains about the prediction
of the company. It explains that the future performance of the company has been better and it
has been evaluated on the basis of current trend and the position of the company in terms of
finance.
It expresses that the level of the company in terms of financial position of the
company is quite better as it offers the long term profit to the company. To conclude, the
financial performance and financial position of the company is quite strong. The above
evaluation and analysis explains that the financial performance and the position of the
company are quite strong and the pro-forma also explains about better changes into the
organization. It explains that the company is quite viable.

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References:
Barker, A. (2016). U.S. Patent Application No. 29/494,132.
Bloomberg. (2018). Costco Wholesale Corp. Retrieved from
https://www.bloomberg.com/quote/COST:US.
Borysov, S. S., Roudi, Y., & Balatsky, A. V. (2015). US stock market interaction network as
learned by the Boltzmann machine. The European Physical Journal B, 88(12), 321.
Courtemanche, C., & Carden, A. (2014). Competing with Costco and Sam's Club: Warehouse
club entry and grocery prices. Southern Economic Journal, 80(3), 565-585.
FT. (2018). Costco Wholesale Corp. Retrieved from
https://markets.ft.com/data/equities/tearsheet/summary?s=COST:NSQ.
Gamble, J., & Thompson, A. A. (2014). Essentials of strategic management. Irwin Mcgraw-
Hill.
Gornall, W., & Strebulaev, I. A. (2015). The economic impact of venture capital: Evidence
from public companies.
History. (2018). Costco Wholesale Corp. Retrieved from https://www.costco.com/.
Investors relation. (2018). Costco Wholesale Corp. Retrieved from http://phx.corporate-
ir.net/phoenix.zhtml?c=83830&p=irol-irhome.
Morningstar. (2018). Costco Wholesale Corp. Retrieved from
http://quicktake.morningstar.com/stocknet/secdocuments.aspx?symbol=cost.
Morningstar. (2018). Costco Wholesale Corp. Retrieved from
http://financials.morningstar.com/income-statement/is.html?
t=COST&region=usa&culture=en-US.
Morningstar. (2018). Costco Wholesale Corp. Retrieved from
http://financials.morningstar.com/ratios/r.html?t=COST.
MSN money. (2018). Costco Wholesale Corp. Retrieved from
https://www.msn.com/en-us/money/stockdetails/fi-126.1.COST.NAS.
NASDAQ. (2018). Costco Wholesale Corp. Retrieved from
https://www.nasdaq.com/symbol/cost.

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NASDAQ. (2018). Costco Wholesale Corp. Retrieved from https://www.stock-analysis-
on.net/NASDAQ/Company/Costco-Wholesale-Corp.
Sullivan, R., & Gouldson, A. (2016). Comparing the climate change actions, targets and
performance of UK and US retailers. Corporate Social Responsibility and
Environmental Management, 23(3), 129-139.
Yahoo finance. (2018). Costco Wholesale Corp. Retrieved from https://finance.yahoo.com/q?
s=cost.

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Appendix:
Appendix 1
Costco Wholesale Corporation (COST)
Income Statement for the Fiscal Years Ending 08/31
USD in millions except per share data 03-09-2017 28-08-2016 30-08-2015
Revenue
$
1,29,025
$
1,18,719
$
1,16,199
Cost of Revenue
$
1,11,882
$
1,02,901
$
1,01,065
Gross Profit
$
17,143
$
15,818
$
15,134
Operating Expenses:
Sales, General and Administrative
$
12,950
$
12,068
$
11,445
Non-Recurring Items
$
82
$
78
$
65
Total Operating Expenses
$
13,032
$
12,146
$
11,510
Operating Income
$
4,111
$
3,672
$
3,624
Add'l Income Expense
$
62
$
80
$
104
Earnings Before Interest and Tax
$
4,173
$
3,752
$
3,728
Interest Expense
$
(134)
$
(133)
$
(124)
Income (Earnings) Before Tax
$
4,039
$
3,619
$
3,604
Provision for Income Taxes
$
1,325
$
1,243
$
1,195
Net Income
$
2,714
$
2,376
$
2,409
Minority Interest
$
(35)
$
(26)
$
(32)
Net Income From Continuing Ops
$
2,679
$
2,350
$
2,377
Earnings Per Share:
Basic
$
6.11
$
5.36
$
5.41

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Diluted
$
6.08
$
5.33
$
5.37
Weighted Average Shares
Outstanding:
Basic
$
438
$
439
$
439
Diluted
$
441
$
441
$
443
EBITDA
$
5,543
$
5,007
$
4,855
Appendix 2
Costco Wholesale Corporation (COST)
Balance Sheet for the Fiscal Years Ending 08/31
USD in millions except per share data
03-09-
2017
28-08-
2016
30-08-
2015
ASSETS
Current assets
Cash and Cash Equivalents $4,546 $3,379 $4,801
Short Term Investments $1,233 $1,350 $1,618
Cash and Short Term Investments $5,779 $4,729 $6,419
Account Receivables $1,432 $1,252 $1,224
Inventory $9,834 $8,969 $8,908
Other Current Assets $272 $268 $228
Total Current Assets
$17,31
7
$15,21
8
$16,77
9
Long-Term Assets
Property, Plant and Equipment
Gross Property, Plant and Equipment
$28,34
1
$26,16
7
$23,66
4
Accumulated Depreciation
($10,1
80)
($9,12
4)
($8,263
)
Net Property, Plant and Equipment
$18,16
1
$17,04
3
$15,40
1
Other Long-Term Assets $869 $902 $837
Total Assets
$36,34
7
$33,16
3
$33,01
7
LIABILITIES AND STOCKHOLDERS EQUITY

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Liabilities
Current Liabilities
Accounts Payable
$13,27
2
$11,11
0
$12,29
2
Short-Term Debt / Current Portion of Long-Term Debt $86 $1,100 $1,283
Other Current Liabilities $4,137 $3,365 $2,964
Total Current Liabilities
$17,49
5
$15,57
5
$16,53
9
Non-Current Liabilities
Long-Term Debt $6,573 $4,061 $4,852
Other Long-Term Liabilities $1,200 $1,195 $783
Minority Interest $301 $253 $226
Total Non-Current Liabilities $8,074 $5,509 $5,861
Total Liabilities
$25,56
9
$21,08
4
$22,40
0
Stockholders' Equity
Common Stock $4 $2 $2
Additional Paid-In Capital (Surplus) $5,800 $5,490 $5,218
Retained Earnings $5,988 $7,686 $6,518
Other Stockholders' Equity
($1,01
4)
($1,09
9)
($1,121
)
Total Stockholders' Equity
$10,77
8
$12,07
9
$10,61
7
Total Liabilities and Stockholders' Equity
$36,34
7
$33,16
3
$33,01
7
Appendix 3
Costco Wholesale Corporation (COST)
Statement of Cash Flows for the Fiscal
Years Ending 08/31
USD in millions
except per share
data
03-09-
2017
28-
08-
2016
30-
08-
2015
Net income $2,714
$2,37
6
$2,40
9
Cash Flows From
Operating
Activities
Depreciation and $1,370 $1,25 $1,12

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15
Amoritization 5 7
Adjustments to
Net Income $471 $671 $202
Changes in
Operating Assets
and Liabilities -
Merchandise
Inventories ($894) ($25)
($890
)
Other Operating
Assets and
Liabilities $807 $547 $557
Changes in
Liabilities -
Accounts Payables $2,258
($1,5
32) $880
Net Cash Flow
From by
Operating
Activities $6,726
$3,29
2
$4,28
5
Cash Flows From
Investing
Activities
Capital
Expenditures -
Additional
Property &
Equipment
($2,502
)
($2,6
49)
($2,3
93)
Other Short Term
Investments $106 $277 ($67)
Other Investing
Activities, Net $30 $27 ($20)
Net Cash Flows
From Investing
Activities
($2,366
)
($2,3
45)
($2,4
80)
Cash Flows From
Financing
Activities
Dividend paid
($3,904
)
($746
)
($2,8
65)
Sale and Purchase
of Stock ($469)
($486
)
($481
)
Net Borrowings $1,346
($1,0
22)
$1,07
9
Excess Tax
Benefits $38 $74 $86
Other Financing
Activities ($229)
($239
)
($143
)

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Total Cash Flows
From Financing
Activities
($3,218
)
($2,4
19)
($2,3
24)
Effects of
Exchange Rates $25 $50
($418
)
Net Change in
Cash and Cash
Equivalents $1,167
($1,4
22)
($937
)
Cash and Cash
Equivalents at the
Beginning of the
Year $3,379
$4,80
1
$5,73
8
Cash and Cash
Equivalents at the
End of the Year $4,546
$3,37
9
$4,80
1
Free Cash Flow
Operating cash
flow
$31,33
8
$34,7
96
$39,1
76
Capital
Expenditures
($2,502
)
($2,6
49)
($2,3
93)
Free cash flow
$33,84
0
$37,4
45
$41,5
69
Appendix 4
Costco Wholesale Corporation (COST)
Common Size Income Statement for the Fiscal Years Ending 08/31
USD in millions except per
share data 2017 2016 2015
Revenue
$
1,29,025 100%
$
1,18,719 100%
$
1,16,199 100%
Cost of Revenue
$
1,11,882
86.71
%
$
1,02,901
86.68
%
$
1,01,065
86.98
%
Gross Profit
$
17,143
13.29
%
$
15,818
13.32
%
$
15,134
13.02
%
Operating Expenses:
Sales, General and
Administrative
$
12,950
10.04
%
$
12,068
10.17
%
$
11,445
9.85
%

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17
Non-Recurring Items
$
82
0.06
%
$
78
0.07
%
$
65
0.06
%
Total Operating Expenses
$
13,032
10.10
%
$
12,146
10.23
%
$
11,510
9.91
%
Operating Income
$
4,111
3.19
%
$
3,672
3.09
%
$
3,624
3.12
%
Add'l Income Expense
$
62
0.05
%
$
80
0.07
%
$
104
0.09
%
Earnings Before Interest and
Tax
$
4,173
3.23
%
$
3,752
3.16
%
$
3,728
3.21
%
Interest Expense
$
(134)
-
0.10
%
$
(133)
-
0.11
%
$
(124)
-
0.11
%
Income (Earnings) Before
Tax
$
4,039
3.13
%
$
3,619
3.05
%
$
3,604
3.10
%
Provision for Income Taxes
$
1,325
1.03
%
$
1,243
1.05
%
$
1,195
1.03
%
Net Income
$
2,714
2.10
%
$
2,376
2.00
%
$
2,409
2.07
%
Minority Interest
$
(35)
-
0.03
%
$
(26)
-
0.02
%
$
(32)
-
0.03
%
Net Income From
Continuing Ops
$
2,679
2.08
%
$
2,350
1.98
%
$
2,377
2.05
%
Earnings Per Share:
Basic
$
6.11
0.00
%
$
5.36
0.00
%
$
5.41
0.00
%
Diluted
$
6.08
0.00
%
$
5.33
0.00
%
$
5.37
0.00
%
Weighted Average Shares
Outstanding:
Basic
$
438
0.34
%
$
439
0.37
%
$
439
0.38
%
Diluted
$
441
0.34
%
$
441
0.37
%
$
443
0.38
%
EBITDA
$
5,543
4.30
%
$
5,007
4.22
%
$
4,855
4.18
%
Appendix 5
Costco Wholesale Corporation (COST)
Common Size Balance Sheet for the Fiscal Years Ending 08/31

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USD in millions except per
share data ######## 28-08-2016 30-08-2015
ASSETS
Current assets
Cash and Cash Equivalents $4,546 12.51% $3,379 10.19% $4,801 14.54%
Short Term Investments $1,233 3.39% $1,350 4.07% $1,618 4.90%
Cash and Short Term
Investments $5,779 15.90% $4,729 14.26% $6,419 19.44%
Account Receivables $1,432 3.94% $1,252 3.78% $1,224 3.71%
Inventory $9,834 27.06% $8,969 27.05% $8,908 26.98%
Other Current Assets $272 0.75% $268 0.81% $228 0.69%
Total Current Assets $17,317 47.64% $15,218 45.89% $16,779 50.82%
Long-Term Assets
Property, Plant and
Equipment
Gross Property, Plant and
Equipment $28,341 77.97% $26,167 78.90% $23,664 71.67%
Accumulated Depreciation ($10,180) -28.01% ($9,124) -27.51% ($8,263) -25.03%
Net Property, Plant and
Equipment $18,161 49.97% $17,043 51.39% $15,401 46.65%
Other Long-Term Assets $869 2.39% $902 2.72% $837 2.54%
Total Assets $36,347 100.00% $33,163 100.00% $33,017 100.00%
LIABILITIES AND
STOCKHOLDERS
EQUITY
Liabilities
Current Liabilities
Accounts Payable $13,272 36.51% $11,110 33.50% $12,292 37.23%
Short-Term Debt / Current
Portion of Long-Term Debt $86 0.24% $1,100 3.32% $1,283 3.89%
Other Current Liabilities $4,137 11.38% $3,365 10.15% $2,964 8.98%
Total Current Liabilities $17,495 48.13% $15,575 46.96% $16,539 50.09%
Non-Current Liabilities
Long-Term Debt $6,573 18.08% $4,061 12.25% $4,852 14.70%
Other Long-Term Liabilities $1,200 3.30% $1,195 3.60% $783 2.37%
Minority Interest $301 0.83% $253 0.76% $226 0.68%
Total Non-Current
Liabilities $8,074 22.21% $5,509 16.61% $5,861 17.75%
Total Liabilities $25,569 70.35% $21,084 63.58% $22,400 67.84%
Stockholders' Equity
Common Stock $4 0.01% $2 0.01% $2 0.01%
Additional Paid-In Capital $5,800 15.96% $5,490 16.55% $5,218 15.80%

Finance
19
(Surplus)
Retained Earnings $5,988 16.47% $7,686 23.18% $6,518 19.74%
Other Stockholders' Equity ($1,014) -2.79% ($1,099) -3.31% ($1,121) -3.40%
Total Stockholders' Equity $10,778 29.65% $12,079 36.42% $10,617 32.16%
Total Liabilities and
Stockholders' Equity $36,347 100.00% $33,163 100.00% $33,017 100.00%
Appendix 6
Costco Wholesale Corporation (COST)
Pro Forma Income Statement for the Fiscal Years Ending 08/31
USD in millions except per share data 2020 2019 2018
Revenue
$
1,53,861
$
1,45,092 $ 1,36,823
Cost of Revenue
$
1,33,418
$
1,25,814 $ 1,18,644
Gross Profit
$
20,443
$
19,278 $ 18,179
Operating Expenses:
Sales, General and Administrative
$
13,391
$
12,628 $ 11,908
Non-Recurring Items
$
85
$
80 $ 75
Total Operating Expenses
$
13,476
$
12,708 $ 11,983
Operating Income
$
6,967
$
6,570 $ 6,196
Add'l Income Expense
$
64
$
60 $ 57
Earnings Before Interest and Tax
$
7,031
$
6,631 $ 6,253
Interest Expense
$
(139)
$
(131)
$
(123)

Finance
20
Income (Earnings) Before Tax
$
6,893
$
6,500 $ 6,129
Provisions for Income Taxes
$
1,370
$
1,292 $ 1,218
Net Income
$
5,523
$
5,208 $ 4,911
Minority Interest
$
(36)
$
(34)
$
(32)
Net Income from Continuing Ops
$
5,486
$
5,174 $ 4,879
Earnings Per Share:
Basic
$
6.32
$
5.96 $ 5.62
Diluted
$
6.29
$
5.93 $ 5.59
Weighted Average Shares Outstanding:
Basic
$
456
$
430 $ 406
Diluted
$
5,732
$
5,405 $ 5,097
EBITDA
$
5,732
$
5,405 $ 5,097
Appendix 7
Costco Wholesale Corporation (COST)
Pro Forma Balance Sheet for the Fiscal Years Ending 08/31
USD in millions except per share data 2020 2019 2018

Finance
21
ASSETS
Current assets
Cash and Cash Equivalents $5,421 $5,112 $4,821
Short Term Investments $1,470 $1,387 $1,308
Cash and Short Term Investments $6,891 $6,499 $6,128
Account Receivables $1,708 $1,610 $1,519
Inventory $11,727 $11,059 $10,428
Other Current Assets $324 $306 $288
Total Current Assets $20,650 $19,473 $18,364
Long-Term Assets
Property, Plant and Equipment
Gross Property, Plant and Equipment $33,796 $31,870 $30,054
Accumulated Depreciation ($12,140) ($11,448) ($10,795)
Net Property, Plant and Equipment $21,657 $20,423 $19,259
Other Long-Term Assets $1,036 $977 $922
Total Assets $43,343 $40,873 $38,544
LIABILITIES AND STOCKHOLDERS EQUITY
Liabilities
Current Liabilities
Accounts Payable $15,827 $14,925 $14,074
Short-Term Debt / Current Portion of Long-Term Debt $103 $97 $91
Other Current Liabilities $4,933 $4,652 $4,387
Total Current Liabilities $20,863 $19,674 $18,552
Non-Current Liabilities
Long-Term Debt $7,838 $7,392 $6,970
Other Long-Term Liabilities $1,431 $1,349 $1,273
Minority Interest $359 $338 $319
Total Non-Current Liabilities $9,628 $9,079 $8,562
Total Liabilities $30,491 $28,753 $27,114
Stockholders' Equity
Common Stock $5 $4 $4
Additional Paid-In Capital (Surplus) $6,916 $6,522 $6,151
Retained Earnings $7,141 $6,734 $6,350
Other Stockholders' Equity ($1,209) ($1,140) ($1,075)
Total Stockholders' Equity $12,853 $12,120 $11,429
Total Liabilities and Stockholders' Equity $43,343 $40,873 $38,544
Appendix 8

Finance
22
Costco Wholesale Corporation (COST)
Pro Forma Statement of Cash Flows for the Fiscal Years Ending 08/31
USD in millions except per share data 2020 2019 2,018
Net income $1,53,861 $1,45,092 b 4,911
Cash Flows From Operating Activities
Depreciation and Amoritization $1,586 $1,510 a 1,439
Adjustments to Net Income $545 $519 495
Changes in Operating Assets and Liabilities
- Merchandising Inventories ($1,035) ($986) c -939
Changes in Accounts Receivables $934 $890 847
Other Operating Assets and Liabilities $2,614 $2,489 2,371
Changes in Liabilities - Accounts Payable $7,786 $7,415 d 7,062
Net Cash Flow From by Operating
Activities $1,65,357 $1,56,041
$
4,151
Cash Flows From Investing Activities
Capital Expenditures - Additional Prperty
and Equipment ($1,947) ($1,854) e -1,766
Other Short Tern Investments $77 $74 70
Other Investing Activities, Net $0 $0 0
Net Cash Flows From Investing Activities $0 $0 -1,696
Cash Flows From Financing Activities
Dividend paid $417 $397 378
Sale and Purchase of Stock $387 $369 351
Net Borrowings $518 $494 470
Excess Tax Benefits $44 $42 40
Other Stovkholder's Equity $399 $380 362
Other Financing Activities ($61) ($58) -43
Total Cash Flows From Financing
Activities $1,704 $1,623 $1,558
Effects of Exchange Rates $105 $85 30
Net Change in Cash and Cash Equivalents 1,704 1,623 4,043
Cash and Cash Equivalents at the Beginning
of the Year $6,254 $6,966 4,546
Cash and Cash Equivalents at the End of the
Year 7,958 8,589 8,589

Finance
23
Free Cash Flow
Operating cash flow $7,958 $8,589 8,589
Capital Expenditures ($1,947) ($1,854) -1,766
Free cash flow $9,905 $10,443 10,355