Analyzing Annual Reports

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Application: Analyzing Annual Reports

WMBA-6050-2 Account Management Decision Making

Darall J. Moore

Walden University

Dr. Dahli Gray

September 7, 2014

The companies whose annual reports I am comparing are Costco Wholesale (http://phx.corporate-ir.net/phoenix.zhtml?c=83830&p=irol-irhome) and Price Smart Membership Shopping (https://shop.pricesmart.com/?target=investor/annual-reports). The two companies are organizations within the warehouse club industry, where customers purchase memberships and pay a fee in order to shop for goods.

As I compare the most recent annual report from both organizations, they seem to reflect a culture of growth and success. Costco reports “net sales for the 52-week fiscal year increased 6% to $103 billion, exceeding $100 billion for the first time in company history” (Costco Wholesale, 2013). Price Smart also reports that “sales were $2.239 billion, an increase of 12% over the prior year” (Price Smart, 2013). Both reports continue to highlight increases in areas of the company which would demonstrate their growth and solidity in their respective industry. Areas of interest include membership retention/growth, membership income, total cost of goods sold, and total revenues.

Individually, the financial statements for both Costco Wholesale and Price Smart offer information for stakeholders to compare and contrast for current and previous financial stability and financial operating status. This is also found in and supported by the auditor’s opinion located within the annual report. For example, in the Costco Wholesale annual report the auditor states:

In our opinion, the consolidate financial statements referred to above present fairly, in all material respects, the financial position of Costco Wholesale Corporation and subsidiaries as of September 2, 2012, and the results of their operations and their cash flows for the 52-week period ended September 1, 2013, the 53-...