Analyzing, Forecasting, and Interpreting Both Income Statement and Balance Sheet

Question

Analyzing, Forecasting, and Interpreting Both Income Statement and Balance Sheet
Following are the income statements and balance sheets of Best Buy Co., Inc.

Forecast Best Buy's fiscal 2012 income statement using the following relations (assume "no change" for accounts not listed).  

Round all answers to the nearest whole number.

Do not use negative signs with your answers in the income statement.

Forecast Best Buy's fiscal 2012 balance sheet using the following relations (assume "no change" for accounts not listed). Assume that all capital expenditures are purchases of property and equipment.

Round answers to the nearest whole number.

Do not use negative signs with your answers in the balance sheet.

Income Statement,
Fiscal Years Ended ($ millions) Feb. 26, 2011 Feb. 27, 2010 Revenue $ 50,272 $ 49,694 Cost of goods sold 37,611 37,534 Restructuring charges - cost of goods sold 24 -- Gross profit 12,637 12,160 Selling, general and administrative expenses 10,325 9,873 Restructuring charges 198 52 Goodwill and tradename impairment -- -- Operating income 2,114 2,235 Other income (expenses) Investment income and other 51 54 Interest expense (87) (94) Earnings before income tax expense and equity in income of affiliates 2,078 2,195 Income tax expense 714 802 Equity in income of affiliates 2 1 Net earnings including noncontrolling interests 1,366 1,394 Net earnings attributable to noncontrolling interests (89) (77) Net earnings attributable to Best Buy Co., Inc. $ 1,277 $ 1,317

Explanation / Answer

Income Statement, Fiscal Years Ended ($ millions) 2012 Estimated Revenue                        51,780 50272 X (1 + 3%) Cost of goods sold                        38,732 74.8% of Revenue Restructuring charges - cost of goods sold                                 -   This is a non-recurring expenses. Assumed that no expense was incurred in 2012 Gross profit                        13,049 Selling, general and administrative expenses                        10,615 20.5% o Revenue Restructuring charges                                 -   This is a non-recurring expenses. Assumed that no expense was incurred in 2012 Goodwill and tradename impairment                                 -   This is a non-recurring expenses. Assumed that no expense was incurred in 2012 Operating income                          2,434 Other income/expenses Investment income and other                                51 Interest expense                              -87 Earnings before income tax expense and equity in income of affiliates                          2,572 Income tax expense                              885 34.4% of Earnings before income tax and equity in income of affiliates Equity in income of affiliates                                  2 Net earnings including noncontrolling interests                              887 Net earnings attributable to noncontrolling interests                                66 7.5% net earnings including non-controlling interest Net earnings attributable to Best Buy Co., Inc.                              820 Balance Sheet 2012 ($ millions) Estimated Assets Cash and cash equivalents Short-term investments                                      22 Receivables                                 2,434 Merchandise inventories                                 6,058 Other current assets                                 1,139 Total current assets                                 9,653 Property and equipment 8681.7 Gross property and equipment 8681.7 Less accumulated depreciation -948.6 Net property and equipment 7733.1 Goodwill 2454 Tradenames, Net 133 Customer Relationships, Net 203 Equity and Other Investments 328 Other assets                                    466 Total assets                               20,970 Liabilities and equity Accounts payable                                 5,023 Unredeemed gift card liabilities                                    466 Accrued compensation and related expenses                                    570 Accrued liabilities                                 1,502 Accrued income taxes                                    259 Short-term debt                                 4,663 Current portion of long-term debt 37 Total current liabilities                               12,519 Long-term liabilities Long-term debt                                 1,115 Contingencies and Commitments (Note 13) 0 Best Buy Co., Inc. Shareholders' Equity Preferred stock, $1.00 par value: Authorized - 400,000 shares; Issued and outstanding - none 0 Common stock, $0.10 par value: Authorized - 1.0 billion shares; Issued and outstanding                                      39 Additional paid-in capital 18 Retained earnings                                 7,037 Accumulated other comprehensive income 175 Total Best Buy Co., Inc. shareholders' equity                                 7,269 Noncontrolling interests                                      66 Total equity                                 7,336 Total liabilities and Equity                               20,970

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