Project #82787 - Managerial 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 =  ($ 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 =  ($ millions) 
2010 NOA =  ($ 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 = %
2011 NOPM = %
2011 NOAT = 


(d) Compute net nonoperating obligations (NNO) for 2011 and 2010. 


2011 NNO =  ($ millions) 
2010 NNO =  ($ 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 = %

(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 = %

(g) Which of the following statements reflects the best inference we can draw from the difference between Best Buy's ROE and RNOA? 

Subject Mathematics
Due By (Pacific Time) 09/19/2015 12:00 am
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