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Financial Ratios using the DuPont Analysis

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 =

Solution Summary

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

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