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 ofaffiliates | 2,078 | 2,195 | 1,700 |
| Income tax expense | 174 | 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 |
NOTE: Use net income attributable to controlling interests inyour computations, when applicable.
a. Compute ROE for 2011.
Do not round until your final answer. Round answer to twodecimal places.
ROE =Answer%
b. Confirm that ROE equals ROE computed using the componentmeasures for profit margin, asset turnover, and financial leverageusing: ROE = PM * AT * FL.
Compute the components of ROE.
Do not round until your final answer. Round answerto two decimal places.
PM = Answer%
AT = Answer
FL = Answer
c. Compute adjusted ROA. Assume a tax rate of: 37.0%.
Round answer to two decimal places.
Adjusted ROA =Answer%
