In: Accounting
Analysis and Interpretation of Profitability
Balance sheets and income statements for Best Buy Co., Inc.
follow.
Consolidated Statements of Earnings | |||
---|---|---|---|
For Fiscal Years Ended ($ millions) | February 26, 2011 | February 27, 2010 | February 28, 2009 |
Revenue | $ 50,272 | $ 49,694 | $ 45,015 |
Cost of goods sold | 37,611 | 37,534 | 34,017 |
Restructuring charges - cost of goods sold | 24 | -- | -- |
Gross Profit | 12,637 | 12,160 | 10,998 |
Selling, general and administrative expenses | 10,325 | 9,873 | 8,984 |
Restructuring charges | 198 | 52 | 78 |
Goodwill and tradename impairment | -- | -- | 66 |
Operating income | 2,114 | 2,235 | 1,870 |
Other income (expense) | |||
Investment income and other | 51 | 54 | 35 |
Investment impairment | -- | -- | (111) |
Interest expense | (87) | (94) | (94) |
Earnings before income tax expense and equity in income of affiliates | 2,078 | 2,195 | 1,700 |
Income tax expense | 714 | 802 | 674 |
Equity in income of affiliates | 2 | 1 | 7 |
Net earnings including noncontrolling interest | 1,366 | 1,394 | 1,033 |
Net income attributable to noncontrolling interest | (89) | (77) | (30) |
Net income attributable to Best Buy Co., Inc. | $ 1,277 | $ 1,317 | $ 1,003 |
Consolidated Balance Sheets | ||
---|---|---|
($ millions, except footnotes) | February 26, 2011 | February 27, 2010 |
Assets | ||
Current assets | ||
Cash and cash equivalents | $ 1,103 | $ 1,826 |
Short-term investments | 22 | 90 |
Receivables | 2,348 | 2,020 |
Merchandise inventories | 5,897 | 5,486 |
Other current assets | 1,103 | 1,144 |
Total current assets | 10,473 | 10,566 |
Property and equipment | ||
Land and buildings | 766 | 757 |
Leasehold improvements | 2,318 | 2,154 |
Fixtures and equipment | 4,701 | 4,447 |
Property under capital lease | 120 | 95 |
7,905 | 7,453 | |
Less: Accumulated depreciation | 4,082 | 3,383 |
Property and equipment, net | 3,823 | 4,070 |
Goodwill | 2,454 | 2,452 |
Tradenames, net | 133 | 159 |
Customer relationships, net | 203 | 279 |
Equity and other investments | 328 | 324 |
Other noncurrent assets | 435 | 452 |
Total assets | $ 17,849 | $ 18,302 |
Liabilities and equity | ||
Current liabilities | ||
Accounts payable | $ 4,894 | $ 5,276 |
Unredeemed gift card liabilities | 474 | 463 |
Accrued compensation and related expenses | 570 | 544 |
Accrued liabilities | 1,471 | 1,681 |
Accrued income taxes | 256 | 316 |
Short-term debt | 557 | 663 |
Current portion of long-term debt | 441 | 35 |
Total current liabilities | 8,663 | 8,978 |
Long-term liabilities | 1,183 | 1,256 |
Long-term debt | 711 | 1,104 |
Equity | ||
Best Buy Co., Inc. Shareholders' equity | ||
Preferred stock, $1.00 par value | -- | -- |
Common stock, $0.10 par value | 39 | 42 |
Additional paid-in capital | 18 | 441 |
Retained earnings | 6,372 | 5,797 |
Accumulated other comprehensive income (loss) | 173 | 40 |
Total Best Buy Co., Inc. shareholders' equity | 6,602 | 6,320 |
Noncontrolling interest | 690 | 644 |
Total equity | 7,292 | 6,964 |
Total liabilities and equity | $ 17,849 | $ 18,302 |
(a) Compute net operating profit after tax (NOPAT) for 2011. Assume
that the combined federal and statutory rate is: 37.0%. (Hint:
Treat equity in income of affiliates as operating. Round your
answer to the nearest whole number.)
2011 NOPAT = Answer($ millions)
(b) Compute net operating assets (NOA) for 2011 and 2010. (Hint:
Treat Equity and Other Investments and Long-Term Liabilities as
operating.)
2011 NOA = Answer($ millions)
2010 NOA = Answer
($ millions)
(c) Compute Best Buy's RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2011. (Do not round until final answer. Round two decimal places. Do not use NOPM x NOAT to calculate RNOA.)
2011 RNOA = Answer%
2011 NOPM = Answer
%
2011 NOAT = Answer
(d) Compute net nonoperating obligations (NNO) for 2011 and
2010.
2011 NNO = Answer($ millions)
2010 NNO = Answer
($ millions)
(e) Compute return on equity (ROE) for 2011. (Round your answers to
two decimal places. Do not round until your final answer.)
2011 ROE = Answer%
(f) Infer the nonoperating return component of ROE for 2011. (Use
answers from above to calculate. Round your answer to two decimal
places.)
2011 nonoperating return = Answer%