Required A. Using the statement of earninvs, prepare a vertical common-size anal

Question

Required

A. Using the statement of earninvs, prepare a vertical common-size analysis for 2011, 2010, a d 2009. Use revenue a base.

B. Using the statement of earnings,prepare or horizontal common size analysis for 2011, 2010, use 2009 as the base.

C. Comments on significance friends that appear in (a) and (b)

bSidia Es) id à manuracturing rm (Cooper tre e tubber Company). EXHIBIT 5-3 Best Buy Co., Inc.* Merchandising Firm Consolidated Balance Sheets S in millions, except per share and share amounts February 26, 2011 February 27, 2010 ASSETS Current Assets 1,103 S1,826 90 Cash and cash equivalents Short-term investments Receivables Merchandise inventories Other current assets 2,348 5,897 1,103 10,473 2,020 5,486 1,144 10,566 Total current assets Property and Equipment 766 2,318 4,701 120 7,905 4,082 3,823 2,454 133 203 328 435 $17,849 757 2,154 4,447 95 7,453 3,383 4,070 2,452 Land and buildings Leasehold improvements Fixtures and equipment Property under capital lease Less accumulated depreciation Net property and equipment Goodwill Tradenames, Net Customer Relationships, Net Equity and Other Investments Other Assets Total Assets 159 279 324 452 $18,302 LIABILITIES AND EQUITY Current Liabilities Accounts payable $4,894 5,276 *"We are a multinational retailer of consumer electronics, home office products, entertainment products, appliances and related services." 10-K Source: Best Buy Co., Inc. 2010 10-K

Explanation / Answer

The calculations are very long and complex. Therefore, it is not practically possible to show calculation for each item of the balance sheet.

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Part A)

Vertical Common-Size Analysis

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Part B)

Horizontal Common Size Analysis

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Part C)

The trends can only be studied for vertical common size analysis. In case of horizontal common size analysis, we need data for another year to study the trends as we have taken the figures as on 27 February 2010 as the base.

Based on vertical common size analysis, the following trends have been observed:

There have been no significant changes in assets and liabilities. Long term debt has, however, declined by 2% and controlling interest has also increased by .4%.

There has been a significant increase in total shareholder's equity (from 34.5% to 37%) and total equity (from 38.1% to 40.9%)

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Notes:

1) There can a slight difference in answers (percentages) on account of rounding off.

Best Buy Co. Inc. Vertical Common-Size Balance Sheet in Percentage February 26, 2011 February 27, 2010 Assets Current assets Cash and cash equivalents 6.2% 10.0% Short-term investments 0.1% 0.5% Receivables 13.2% 11.0% Merchandise inventories 33.0% 30.0% Other current assets 6.2% 6.3% Total current assets 58.7% 57.7% Property and equipment Land and buildings 4.3% 4.1% Leashold improvements 13.0% 11.8% Fixtures and equipment 26.3% 24.3% Property under capital lease 0.7% 0.5% Less Accumulated depreciation 22.9% 18.5% 44.3% 40.7% Net property and equipment 21.4% 22.2% Goodwill 13.7% 13.4% Tradenames, net 0.7% 0.9% Customer relationships, net 1.1% 1.5% Equity and other investments 1.8% 1.8% Other assets 2.4% 2.5% Total assets 100.0% 100.0% Liabilities and equity Current liabilities Accounts payable 27.4% 28.8% Unredeemed gift card liabilities 2.7% 2.5% Accrued compensation and related
Expense 3.2% 3.0% Accrued liabilities 8.2% 9.2% Accrued income taxes 1.4% 1.7% Short-term debt 3.1% 3.6% Current portion of long-term debt 2.5% 0.2% Total current liabilities 48.5% 49.1% Long-term liabilities 6.6% 6.9% Long-term debt 4.0% 6.0% Contingencies and commitments Equity Preferred stock Common stock 0.2% 0.2% Additional paid-in-capital 0.1% 2.4% Retained earnings 35.7% 31.7% Accumulated other comprehensive income 0.1% 0.2% Total Best Buy Co., Inc. shareholders’ equity 37.0% 34.5% Noncontrolling interests 3.9% 3.5% Total equity 40.9% 38.1% Total liabilities and equity 100.0% 100.0%

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