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Costco Wholesale (NAS:COST) Financial Strength

: 8 (As of Nov. 2023)
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Costco Wholesale has the Financial Strength Rank of 8. It shows strong financial strength and is unlikely to fall into distressed situations.

Good Sign:

Costco Wholesale Corp shows strong financial strength.

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors:

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3. Altman Z-Score.

Costco Wholesale's Interest Coverage for the quarter that ended in Nov. 2023 was 52.21. Costco Wholesale's debt to revenue ratio for the quarter that ended in Nov. 2023 was 0.04. As of today, Costco Wholesale's Altman Z-Score is 8.24.


Competitive Comparison

For the Discount Stores subindustry, Costco Wholesale's Financial Strength, along with its competitors' market caps and Financial Strength data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Costco Wholesale Financial Strength Distribution

For the Retail - Defensive industry and Consumer Defensive sector, Costco Wholesale's Financial Strength distribution charts can be found below:

* The bar in red indicates where Costco Wholesale's Financial Strength falls into.



Costco Wholesale Financial Strength Calculation

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

Costco Wholesale's Interest Expense for the months ended in Nov. 2023 was $-38 Mil. Its Operating Income for the months ended in Nov. 2023 was $1,984 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Nov. 2023 was $8,267 Mil.

Costco Wholesale's Interest Coverage for the quarter that ended in Nov. 2023 is

Interest Coverage=-1*Operating Income (Q: Nov. 2023 )/Interest Expense (Q: Nov. 2023 )
=-1*1984/-38
=52.21

The higher the ratio, the stronger the company's financial strength is.

2. Debt to revenue ratio. The lower, the better.

Costco Wholesale's Debt to Revenue Ratio for the quarter that ended in Nov. 2023 is

Debt to Revenue Ratio=Total Debt (Q: Nov. 2023 ) / Revenue
=(Short-Term Debt & Capital Lease Obligation + Long-Term Debt & Capital Lease Obligation) / Revenue
=(1080 + 8267) / 231196
=0.04

3. Altman Z-Score.

Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

The zones of discrimination were as such:

When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.

Costco Wholesale has a Z-score of 8.24, indicating it is in Safe Zones. This implies the Z-Score is strong.

Good Sign:

Altman Z-score of 8.24 is strong.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Costco Wholesale  (NAS:COST) Financial Strength Explanation

The maximum rank is 10. Companies with rank 7 or higher will be unlikely to fall into distressed situations. Companies with rank of 3 or less are likely in financial distress.

Costco Wholesale has the Financial Strength Rank of 8. It shows strong financial strength and is unlikely to fall into distressed situations.


Costco Wholesale Financial Strength Related Terms

Thank you for viewing the detailed overview of Costco Wholesale's Financial Strength provided by GuruFocus.com. Please click on the following links to see related term pages.


Costco Wholesale (NAS:COST) Business Description

Address
999 Lake Drive, Issaquah, WA, USA, 98027
Costco operates a membership-based, no-frills retail model, predicated on offering a select product assortment in bulk quantities at bargain prices. The firm avoids maintaining costly product displays by keeping inventory on pallets and limits distribution expenses by storing its inventory at point of sale in the warehouse. Given Costco's frugal cost structure, the firm is able to price its merchandise below competing retailers, driving high sales volume per warehouse and allowing the retailer to generate strong profits on thin margins. Costco operates nearly 600 warehouses in the United States and boasts over 60% market share in the domestic warehouse club industry. Internationally, Costco operates another 270 warehouses, primarily in markets such as Canada, Mexico, Japan, and the U.K.
Executives
W Craig Jelinek officer: Executive VP 999 LAKE DRIVE, ISSAQUAH WA 98027
Yoram Rubananko officer: Executive VP 999 LAKE DRIVE, ISSAQUAH WA 98027
Caton Frates officer: Executive Vice President 999 LAKE DRIVE, ISSAQUAH WA 98027
Daniel M. Hines other: Principal Acctg Officer 999 LAKE DRIVE, ISSAQUAH WA 98027
Richard A Galanti director, officer: Executive VP and CFO 999 LAKE DRIVE, ISSAQUAH WA 98027
Pierre Riel officer: EVP 999 LAKE DRIVE, ISSAQUAH WA 98027
Russell D Miller officer: Executive Vice President 999 LAKE DRIVE, ISSAQUAH WA 98027
Claudine Adamo officer: Executive Vice President 999 LAKE DRIVE, ISSAQUAH WA 98027
James C Klauer officer: Executive Vice President 999 LAKE DRIVE, ISSAQUAH WA 98027
Patrick J Callans officer: Executive VP 999 LAKE DRIVE, ISSAQUAH WA 98027
Helena Foulkes director ONE CVS DRIVE, WOONSOCKET RI 02895
Susan L Decker director C/O YAHOO INC, 701 FIRST AVE, SUNNYVALE CA 94089
Roland Michael Vachris officer: Executive VP 999 LAKE DRIVE, ISSAQUAH WA 98027
James P. Murphy officer: Executive VP 999 LAKE DRIVE, ISSAQUAH WA 98027
Kenneth D Denman director