USD 5,124 Mil as of today(2019-10-19). Costco Wholesale Long-Term Debt & Capital Lease Obligation explanation, calculation, historical data and more" />Costco Wholesale Long-Term Debt & Capital Lease Obligation | COST - GuruFocus.com
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Costco Wholesale Long-Term Debt & Capital Lease Obligation

: USD 5,124 Mil (As of Aug. 2019)
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Long-Term Debt & Capital Lease Obligation is the debt and capital lease obligation due more than 12 months in the future. Costco Wholesale's Long-Term Debt & Capital Lease Obligation for the quarter that ended in Aug. 2019 was USD 5,124 Mil.

Warning Sign:

Costco Wholesale Corp has been issuing new debt. Over the past 3 years, it issued USD1.9 billion of debt. But overall, its debt level is acceptable.

LT-Debt-to-Total-Asset is a measurement representing the percentage of a corporation's assets that are financed with loans and financial obligations lasting more than one year. The ratio provides a general measure of the financial position of a company, including its ability to meet financial requirements for outstanding loans. It is calculated as a company's Long-Term Debt & Capital Lease Obligation divides by its Total Assets. Costco Wholesale's Long-Term Debt & Capital Lease Obligation for the quarter that ended in Aug. 2019 was USD 5,124 Mil. Costco Wholesale's Total Assets for the quarter that ended in Aug. 2019 was USD 45,400 Mil. Costco Wholesale's LT-Debt-to-Total-Asset for the quarter that ended in Aug. 2019 was 0.11.

Costco Wholesale's LT-Debt-to-Total-Asset declined from Nov. 2018 (0.15) to Aug. 2019 (0.11). It may suggest that Costco Wholesale is progressively becoming less dependent on debt to grow their business.


Costco Wholesale Long-Term Debt & Capital Lease Obligation Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Costco Wholesale Annual Data
Aug10 Aug11 Aug12 Aug13 Aug14 Aug15 Aug16 Aug17 Aug18 Aug19
Long-Term Debt & Capital Lease Obligation Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4,852.00 4,061.00 6,573.00 6,487.00 5,124.00

Costco Wholesale Quarterly Data
Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17 Nov17 Feb18 May18 Aug18 Nov18 Feb19 Apr19 May19 Aug19
Long-Term Debt & Capital Lease Obligation Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6,480.00 4,794.00 4,799.00 4,799.00 5,124.00

Costco Wholesale Long-Term Debt & Capital Lease Obligation Calculation

Long-Term Debt is the debt due more than 12 months in the future. The debt can be owed to banks or bondholders. Some companies issue bonds to investors and pay interest on the bonds.

Long-Term Capital Lease Obligation represents the total liability for long-term leases lasting over one year. It's amount equal to the present value (the principal) at the beginning of the lease term less lease payments during the lease term.

The interest paid on companies' debt is reflected in the income statement as interest expense. If a company has too much debt and it cannot serve the interest payment on the debt or repay the matured debt, the company risks bankruptcy. Peter Lynch famously said: A company that does not have debt cannot go bankrupt.

A company's long term debt may have different dates of maturity and interest rates, depending on the terms.

Usually a company issues long term debt to pay for its capital expenditures. Borrowing allows the company to do things that otherwise cannot be done with only the capital it has. But debt can be risky.


Costco Wholesale  (NAS:COST) Long-Term Debt & Capital Lease Obligation Explanation

LT-Debt-to-Total-Asset is a measurement representing the percentage of a corporation's assets that are financed with loans and financial obligations lasting more than one year. The ratio provides a general measure of the financial position of a company, including its ability to meet financial requirements for outstanding loans. A year-over-year decrease in this metric would suggest the company is progressively becoming less dependent on debt to grow their business.

Costco Wholesale's LT-Debt-to-Total-Asset ratio for the quarter that ended in Aug. 2019 is calculated as:

LT-Debt-to-Total-Asset (Q: Aug. 2019 )=Long-Term Debt & Capital Lease Obligation (Q: Aug. 2019 )/Total Assets (Q: Aug. 2019 )
=5124/45400
=0.11

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Buffett says that durable competitive advantages carry little to no long-term debt because the company is so profitable that even expansions or acquisitions are self financed.

We are interested in long term debt load for the last ten years. If the ten years of operation show little to no long term debt, then the company has some kind of strong competitive advantage.

Warren Buffett's historic purchases indicate that on any given year, the company should have sufficient yearly net earnings to pay all long term within 3 or 4 year earnings period. (e.g. Coke + Moody's = 1yr)

Companies with enough earning power to pay long term debt in less than 3 or 4 years is a good candidate in our search for long term competitive advantage.

BUT, these companies are targets for leveraged buy outs, which saddles the business with long term debt.

If all else indicates the company has a moat, but it has ton of debt, a leveraged buyout may have created the debt. In these cases the company's bonds offer the better bet, in that the company’s earnings power is focused on paying off the debt and not growth.

Important: little or no long term debt often means a Good Long Term Bet


Costco Wholesale Long-Term Debt & Capital Lease Obligation Related Terms


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