Analysis of Operating Leases
An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.
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Costco Wholesale Corp. pages available for free this week:
- Statement of Comprehensive Income
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Dividend Discount Model (DDM)
- Return on Equity (ROE) since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Debt
- Aggregate Accruals
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Adjustments to Financial Statements for Operating Leases
Costco Wholesale Corp., adjustments to financial statements
US$ in millions
Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).
1, 2 Equal to total present value of future operating lease payments.
Costco Wholesale Corp., Financial Data: Reported vs. Adjusted
Adjusted Financial Ratios for Operating Leases (Summary)
Costco Wholesale Corp., adjusted financial ratios
Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).
| Financial ratio | Description | The company |
|---|---|---|
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Costco Wholesale Corp. adjusted total asset turnover ratio deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level. |
| Adjusted debt to equity | A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. | Costco Wholesale Corp. adjusted debt to equity ratio improved from 2022 to 2023 but then slightly deteriorated from 2023 to 2024. |
| Adjusted ROA | A profitability ratio calculated as net income divided by adjusted total assets. | Costco Wholesale Corp. adjusted ROA improved from 2022 to 2023 and from 2023 to 2024. |
Costco Wholesale Corp., Financial Ratios: Reported vs. Adjusted
Adjusted Total Asset Turnover
Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).
2024 Calculations
1 Total asset turnover = Net sales ÷ Total assets
= ÷ =
2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= ÷ =
| Activity ratio | Description | The company |
|---|---|---|
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Costco Wholesale Corp. adjusted total asset turnover ratio deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level. |
Adjusted Debt to Equity
Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).
2024 Calculations
1 Debt to equity = Total debt ÷ Total Costco stockholders’ equity
= ÷ =
2 Adjusted debt to equity = Adjusted total debt ÷ Total Costco stockholders’ equity
= ÷ =
| Solvency ratio | Description | The company |
|---|---|---|
| Adjusted debt-to-equity | A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. | Costco Wholesale Corp. adjusted debt-to-equity ratio improved from 2022 to 2023 but then slightly deteriorated from 2023 to 2024. |
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).
2024 Calculations
1 ROA = 100 × Net income attributable to Costco ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Net income attributable to Costco ÷ Adjusted total assets
= 100 × ÷ =
| Profitability ratio | Description | The company |
|---|---|---|
| Adjusted ROA | A profitability ratio calculated as net income divided by adjusted total assets. | Costco Wholesale Corp. adjusted ROA improved from 2022 to 2023 and from 2023 to 2024. |