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    Financial Ratios using the DuPont Analysis

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    Consolidated Statements of Earnings

    For Fiscal Years Ended ($ millions) February 27, 2010 February 28, 2009 March 1, 2008
    Revenue $ 49,694 $ 45,015 $ 40,023
    Cost of goods sold 37,534 34,017 30,477
    Restructuring charges - cost of goods sold
    Gross Profit 12,160 10,998 9,546
    Selling, general and administrative expenses 9,873 8,984 7,385
    Restructuring charges 52 78 --
    Goodwill and tradename impairment -- 66 --
    Operating income 2,235 1,870 2,161
    Other income (expense)
    Investment income and other 54 35 129
    Investment impairment -- (111) --
    Interest expense (94) (94) (62)
    Earnings before income tax expense and equity in income of affiliates 2,195 1,700 2,228
    Income tax expense 802 674 815
    Equity in income of affiliates 1 7 (3)
    Net earnings including noncontrolling interest 1,394 1,033 1,410
    Net income attributable to noncontrolling interest (77) (30) (3)
    Net income attributable to Best Buy Co., Inc. $ 1,317 $ 1,003 $ 1,407

    Consolidated Balance Sheets
    ($ millions, except footnotes) February 27, 2010 February 28, 2009
    Assets
    Current assets
    Cash and cash equivalents $ 1,826 $ 498
    Short-term investments 90 11
    Receivables 2,020 1,868
    Merchandise inventories 5,486 4,753
    Other current assets 1,144 1,062
    ________________________________________
    Total current assets 10,566 8,192
    Property and equipment
    Land and buildings 757 755
    Leasehold improvements 2,154 2,013
    Fixtures and equipment 4,447 4,060
    Property under capital lease 95 112
    ________________________________________
    7,453 6,940
    Less: Accumulated depreciation 3,383 2,766
    ________________________________________
    Property and equipment, net 4,070 4,174
    Goodwill 2,452 2,203
    Tradenames, net 159 173
    Customer relationships, net 279 322
    Equity and other investments 324 395
    Other noncurrent assets 452 367
    ________________________________________
    Total assets $ 18,302 $ 15,826
    Liabilities and equity
    Current liabilities
    Accounts payable $ 5,276 $ 4,997
    Unredeemed gift card liabilities 463 479
    Accrued compensation and related expenses 544 459
    Accrued liabilities 1,681 1,382
    Accrued income taxes 316 281
    Short-term debt 663 783
    Current portion of long-term debt 35 54
    ________________________________________
    Total current liabilities 8,978 8,435
    Long-term liabilities 1,256 1,109
    Long-term debt 1,104 1,126
    Equity
    Best Buy Co., Inc. Shareholders' equity
    Preferred stock, $1.00 par value -- --
    Common stock, $0.10 par value 42 41
    Additional paid-in capital 441 205
    Retained earnings 5,797 4,714
    Accumulated other comprehensive income (loss) 40 (317)
    ________________________________________
    Total Best Buy Co., Inc. shareholders' equity 6,320 4,643
    Noncontrolling interest 644 513
    ________________________________________
    Total equity 6,964 5,156
    ________________________________________
    Total liabilities and equity $ 18,302 $ 15,826

    Apply the basic DuPont model and compute the component measures for profit margin, asset turnover, and financial leverage. (Do not round until your final answer. Round your answers to two decimal places.)
    Net profit margin =

    Asset turnover =

    Financial leverage =

    (b) Compute ROE using financial information provided in the balance sheet and income statement. Do not use ROE = PM x AT x FL. (Do not round until your final answer. Round your answer to two decimal places.)
    ROE =

    (c) Compute adjusted ROA. Assume a tax rate of: 37.0%. (Round your answer to two decimal places.)
    Adjusted ROA =

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    Solution Summary

    This solution helps to find out ROE using DuPont formula and also helps to calculate adjusted ROA.

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