Question: Best Buy Co, Inc., is a leading
Best Buy Co, Inc., is a leading retailer specializing in consumer electronics. A condensed income statement and balance sheet for the fiscal year ended January 30, 2016, are shown next.
Liquidity and solvency ratios for the industry are as follows:
Industry Average
Current ration…………………………1.23
Acid-test ratio ………………………..0.60
Debt to equity ………………….…….0.70
Times interest earned …….5.66 times
Required:
1. Determine the following ratios for Best Buy for its fiscal year ended January 30, 2016.
a. Current ratio
b. Acid-test ratio
c. Debt to equity ratio
d. Times interest earned ratio
2. Using the ratios from requirement 1, assess Best Buy’s liquidity and solvency relative to its industry.
Transcribed Image Text:
Best Buy Co., Inc. Balance Sheet At January 30, 2016 ($ in millions) Assets Current assets: Cash and cash equivalents $ 1,976 Short-term investments 1,305 1,162 5,051 Accounts receivable, net Merchandise inventories Other current assets 392 Total current assets 9,886 3,633 Long-term assets Total assets $13,519 Llablitles and Shareholders' Equlty Current liabilities: Accounts payable $ 4,450 Other current liabilities 2,475 Total current liabilities Long-term liabilities Shareholders' equity 6,925 2,216 4,378 Total liabilities and shareholders' equity $13,519 Best Buy Co., Inc. Income Statement For the Year Ended January 30, 2016 ($ in millions) Revenues $ 39,528 Costs and expenses Operating income Other income (expense)" 38,153 1,375 (65) Income before income taxes 1,310 Income tax expense 503 Net income $ 807 "Includes $80 of interest expense.
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