Costco Weaknesses

Costco Wholesale Corporation is an international membership warehouse that brings low prices, best quality and a wide selection of products to their customers. Costco began operation in 1983 and has successfully thrived in the past thirty years. The company has had some weakness, and threats throughout the years, but has many strengths as well as opportunities for the company. Costco’s liquidity and efficiency, solvency, profitability and market prospects show the problems and success the company has achieved. The company’s liquidity and efficiency show how well Costco is using their assets and resources to meet short-term cash requirements. By evaluating the working capital and checking their current ratio, which is 1.22 in 2014, shows

By checking the debt and equity ratio, the company’s debt is higher than its equity and that raises concerns for the corporation because debt can have effect of increasing the return on stockholders. The company’s debt-to-equity ratio is high with 1.64 in 2014 and with a more debt than equity, it increases risk because implies less opportunity to expand through use of debt financing. Although, Costco’s debt-to-equity ratio has gone since 2013 with a 1.75 ratio, the ratio is still high for the company with the debts exceeding the equity. For the company’s price-earnings, it is 25.82 which is high and more likely to overprice but a high PE ratio can prove to be good investment if its earnings continue to increase beyond current expectations and the company’s earnings are increasing. The company’s dividend yield has dropped since 2013 with a 7.3% to 1.10% in 2014 which indicates an overvalued stock or a larger dividend in the years to come for Costco. The company’s annual cash dividends per share had decreased from $8.17 to $1.33 in just one year, that may be risk for the company if their dividend yield keeps falling lower. Costco’s solvency and market prospect has numerous