n, Australia, South Korea, Taiwan, Mexico and Puerto Rico. As of its fiscal year-end 2016, Costco had approximately 86.7 million members. Selected fiscal-year information from the company's balance sheets follows. Selected Balance Sheet Data ($ millions) 2016 2015 Merchandise inventories $8,969 $8,908 Deferred membership income (liability) 1,362 1,269 (a) During fiscal 2016, Costco collected $2,739 million cash for membership fees. Use the financial statement effects template to record the cash collected for membership fees.(b) Costco recorded merchandise costs (that is, cost of goods sold) of $102,901 million in 2016. Record this transaction in the financial statement effect
Dividend Valuation
Dividend refers to a reward or cash that a company gives to its shareholders out of the profits. Dividends can be issued in various forms such as cash payment, stocks, or in any other form as per the company norms. It is usually a part of the profit that the company shares with its shareholders.
Dividend Discount Model
Dividend payments are generally paid to investors or shareholders of a company when the company earns profit for the year, thus representing growth. The dividend discount model is an important method used to forecast the price of a company’s stock. It is based on the computation methodology that the present value of all its future dividends is equivalent to the value of the company.
Capital Gains Yield
It may be referred to as the earnings generated on an investment over a particular period of time. It is generally expressed as a percentage and includes some dividends or interest earned by holding a particular security. Cases, where it is higher normally, indicate the higher income and lower risk. It is mostly computed on an annual basis and is different from the total return on investment. In case it becomes too high, indicates that either the stock prices are going down or the company is paying higher dividends.
Stock Valuation
In simple words, stock valuation is a tool to calculate the current price, or value, of a company. It is used to not only calculate the value of the company but help an investor decide if they want to buy, sell or hold a company's stocks.
Inferring Transactions from Financial Statements
Costco Wholesale Corporation operates membership warehouses selling food, appliances, consumer electronics, apparel and other household goods at 721locations across the U.S. as well as in Canada, the United Kingdom, Japan, Australia, South Korea, Taiwan, Mexico and Puerto Rico. As of its fiscal year-end 2016, Costco had approximately 86.7 million members. Selected fiscal-year information from the company's balance sheets follows.
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Selected |
2016 | 2015 |
|---|---|---|
| Merchandise inventories | $8,969 | $8,908 |
| Deferred membership income (liability) | 1,362 | 1,269 |
(a) During fiscal 2016, Costco collected $2,739 million cash for membership fees. Use the financial statement effects template to record the cash collected for membership fees.
(b) Costco recorded merchandise costs (that is, cost of goods sold) of $102,901 million in 2016. Record this transaction in the financial statement effects template.
(c) Determine the value of merchandise that Costco purchased during 2016. Use the financial statement effects template to record these merchandise purchases. Assume all of Costco's purchases are on account, and recorded in accounts payable.
Use negative signs with answers, when appropriate. Enter answers in millions.
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Balance Sheet
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| Transaction | Cash Asset |
+ | Noncash Assets |
= | Liabilities | + | Contributed Capital |
+ | Earned Capital |
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| (a) | Answer | Answer | Answer | Answer | Answer | |||||
| (b) | Answer | Answer | Answer | Answer | Answer | |||||
| (c) | Answer | Answer | Answer | Answer | Answer |
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Income Statement
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Revenue |
- |
Expenses |
= |
Net Income |
| Answer | Answer | Answer | ||
| Answer | Answer | Answer | ||
| Answer | Answer | Answer |
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