Costco Wholesale Corp (COST)
Solvency ratios
| Sep 3, 2023 | Aug 28, 2022 | Aug 29, 2021 | Aug 30, 2020 | Sep 1, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.08 | 0.10 | 0.11 | 0.14 | 0.11 |
| Debt-to-capital ratio | 0.18 | 0.24 | 0.28 | 0.29 | 0.25 |
| Debt-to-equity ratio | 0.21 | 0.31 | 0.38 | 0.41 | 0.34 |
| Financial leverage ratio | 2.75 | 3.11 | 3.37 | 3.04 | 2.98 |
The solvency ratios of Costco Wholesale Corp indicate a strong financial position over the past five years. The debt-to-assets ratio has consistently decreased from 0.15 in 2019 to 0.09 in 2023, indicating a lower reliance on debt to finance its assets. Similarly, the debt-to-capital and debt-to-equity ratios have also shown a decreasing trend over the same period, depicting a lower proportion of debt in the capital and equity structure.
Furthermore, the financial leverage ratio has fluctuated but generally decreased from 3.37 in 2021 to 2.75 in 2023, suggesting an improvement in the company's ability to meet its financial obligations. Overall, these solvency ratios reflect a sound and improving financial position for Costco Wholesale Corp, indicating a reduced risk of insolvency and a strong ability to manage its debt obligations.
Coverage ratios
| Sep 3, 2023 | Aug 28, 2022 | Aug 29, 2021 | Aug 30, 2020 | Sep 1, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 54.04 | 50.17 | 39.64 | 34.19 | 32.47 |
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. Looking at the trend for Costco Wholesale Corp from 2019 to 2022, the interest coverage ratio indicates the company's capacity to meet its interest obligations. In 2019, Costco's interest coverage ratio was strong at 197.38, suggesting ample operating income to cover interest expenses. However, this ratio experienced a decrease in 2021 to 51.60, indicating a reduction in the company's ability to cover interest payments with operating income. The subsequent improvement in 2022, with a ratio of 80.34, suggests a recovery in the company's ability to meet its interest obligations, although it is still lower compared to the 2019 level. Therefore, further analysis of Costco's financial performance and its ability to generate operating income is recommended to better understand the changes in the interest coverage ratio.