Answer and explain each question specifically by analyzing and quoting AS MANY DATA and RATIOS as necessary.
1. How appropriate are the five factors that Torres chooses to determine the future performance of Costco?
2. What other relevant factor might be included in the forecast of the business? To what extent are they covered in the factors above?
3. Review Torres’ forecasted income statement and regular income statement? Are these achievable results for Costco?
4. Review Torres’ forecast in Exhibit 5. How does the rate of expansion (new store openings) affect the balance sheet and free cash flow? Do you agree with her assumptions?
5. Would you recommend that Torres buy, hold, or sell her Costco shares at a price of $35?
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