Analyzing, Forecasting, and Interpreting Both Income Statement and Balance Sheet Following are the income statements and balance sheets of Best Buy Co., Inc. 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 $1,317 Balance Sheet ($ millions) Feb. 26, 2011 Feb. 27, 2010 cate $ 17,849 $ 18,302 $5,276 463 544 $ 4,894 474 570 1,471 256 557 1,681 Total assets Liabilities and Equity Accounts payable Unredeemed giftcard liabilities Accrued compensation and related expenses Accrued liabilities Accrued income taxes Short-term debt Current portion of long-term debt Total current liabilities Long-term liabilities Long-term debt Best Buy Co., Inc. Shareholders' Equity Preferred stock, $ 1.00 par value: Authorized-400,000 shares; Issued and outstanding-none Common stock $0.10 par value: Authorized-1.0 billion shares; Issued and outstanding-392,590,000 and 418,815,000 shares, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive income Total Best Buy Co., Inc. shareholders' equity Noncontrolling interests Total equity Total liabilities and shareholders' equity 441 8,663 1,183 711 316 663 35 8,978 1,256 1,104 39 42 441 5,797 40 18 6,372 173 6,602 690 7,292 $ 17,849 6,320 644 6,964 $ 18,302 Forecast Best Buy's fiscal 2012 income statement using the following relations (assume "no change for accounts not listed). 4.5% Revenue growth Cost of good sold/Revenue 74.896 39 42 18 441 6,372 5,797 40 Common stock $0.10 par value: Authorized-1.0 billion shares; Issued and outstanding-392,590,000 and 418,815,000 shares, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive income Total Best Buy Co., Inc. shareholders' equity Noncontrolling interests Total equity Total liabilities and shareholders' equity 173 6,602 690 7,292 $ 17,849 6,320 644 6,964 $ 18,302 20.5% Forecast Best Buy's fiscal 2012 income statement using the following relations (assume "no change" for accounts not listed). Revenue growth 4.5% Cost of good sold/Revenue 74.8% Restructuring charges - cost of good sold $-- Selling, general and administrative expenses/Revenue Restructuring charges Goodwill and trademark impairment $-- Investment income and other $51 Investment impairment Interest expense $87 Income tax expense/Pretax income 34.4% Equity in income of affiliates $2 Net earnings attributable to noncontrolling interests/Net earnings including noncontrolling interests 7.5% Round all answers to the nearest whole number. Do not use negative signs with your answers in the income statement. 2012 Estimated $ 52,534 39,295 13,239 10,769 0 0 0 2,470 Income Statement, Fiscal Years Ended (5 millions) Revenue Cost of goods sold Restructuring charges - cost of goods sold Gross profit Selling general and administrative expenses Restructuring charges Goodwill and tradename impairment Operating income Other Income/expenses Investment income and other Interest expense Earnings before income tax expense and equity in income of affiliates Income tax expense Equity in income of affiliates Net earnings including noncontrolling interests Net earnings attributable to noncontrolling interests Net earnings attributable to Best Buy Co., Inc. 51 87 2,434 837 2 1,599 120 1,479 $ 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. No change 4.7% Short-term investments Receivables/Revenue Merchandise inventories/Revenue Other current assets/Revenue cary 11.7% 2.2% No change 4.7% 11.7% 2.2% 1.5% No change $25 $38 No change 0.9% Short-term investments Receivables/Revenue Merchandise inventories/Revenue Other current assets/Revenue CAPEX (Increase in gross Property and equipmenty/Revenue Goodwill Amortization expense for Tradenames Amortization expense for Customer relationships Equity and Other Investments Other Assets/Revenue Accounts payable/Revenue Unredeemed gift card liabilities/Revenue Accrued compensation and related expenses/Revenue Accrued liabilities/Revenue Accrued Income taxes/Revenue Long-term liabilities Noncontrolling interests Depreciation/Prior year gross PPE Amortization/Prior year intangible asset balance Dividends/Net income Long-term debt payments required in fiscal 2013 *increase by net income attributable to noncontrolling interests and assume no dividends 9.7% 0.9% 1.1% 2.9% 0.5% No change + 12.0% 18.7% 18.6% $37 . Round all answers to the nearest whole number. Do not use negative signs with your answers in the balance sheet. Balance Sheet ($ millions) 2012 Estimated Assets $ 2,005 X 22 2,481 x 6,587 X 1,127 x OX OX OX 0 x 2,454 0x Cash and cash equivalents Short-term investments - Receivables Merchandise inventories Other current assets Total current assets Property and equipment Gross property and equipment Less accumulated depreciation Net property and equipment Goodwill Tradenames, Net Customer Relationships, Net Equity and Other Investments Other assets Total assets Liabilities and equity Accounts payable Unredeemed gift card liabilities Accrued compensation and related expenses Accrued liabilities Accrued Income taxes Short-term debt Current portion of long-term debt OX OX 0 X OX $ OX OX OX OX OX 0 X OX OX 0 X OX $ OX $ 0x OX OX OX 0x OX OX OX Customer Relationships, Net Equity and Other Investments Other assets Total assets Liabilities and equity Accounts payable Unredeemed gift card liabilities Accrued compensation and related expenses Accrued liabilities Accrued income taxes Short-term debt Current portion of long-term debt Total current liabilities Long-term liabilities Long-term debt Best Buy Co., Inc. Shareholders' Equity Preferred stock, $1.00 par value: Authorized - 400,000 shares; Issued and outstanding - none Common stock, $0.10 par value: Authorized - 1.0 billion shares; Issued and outstanding - 392,590,000 and 418,815,000 shares, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive Income Total Best Buy Co., Inc. shareholders' equity Noncontrolling interests Total equity Total liabilities and Equity OX OX 0 OX OX OX OX OX OX 0x $ 0 x Analyzing, Forecasting, and Interpreting Both Income Statement and Balance Sheet Following are the income statements and balance sheets of Best Buy Co., Inc. 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 $1,317 Balance Sheet ($ millions) Feb. 26, 2011 Feb. 27, 2010 cate $ 17,849 $ 18,302 $5,276 463 544 $ 4,894 474 570 1,471 256 557 1,681 Total assets Liabilities and Equity Accounts payable Unredeemed giftcard liabilities Accrued compensation and related expenses Accrued liabilities Accrued income taxes Short-term debt Current portion of long-term debt Total current liabilities Long-term liabilities Long-term debt Best Buy Co., Inc. Shareholders' Equity Preferred stock, $ 1.00 par value: Authorized-400,000 shares; Issued and outstanding-none Common stock $0.10 par value: Authorized-1.0 billion shares; Issued and outstanding-392,590,000 and 418,815,000 shares, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive income Total Best Buy Co., Inc. shareholders' equity Noncontrolling interests Total equity Total liabilities and shareholders' equity 441 8,663 1,183 711 316 663 35 8,978 1,256 1,104 39 42 441 5,797 40 18 6,372 173 6,602 690 7,292 $ 17,849 6,320 644 6,964 $ 18,302 Forecast Best Buy's fiscal 2012 income statement using the following relations (assume "no change for accounts not listed). 4.5% Revenue growth Cost of good sold/Revenue 74.896 39 42 18 441 6,372 5,797 40 Common stock $0.10 par value: Authorized-1.0 billion shares; Issued and outstanding-392,590,000 and 418,815,000 shares, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive income Total Best Buy Co., Inc. shareholders' equity Noncontrolling interests Total equity Total liabilities and shareholders' equity 173 6,602 690 7,292 $ 17,849 6,320 644 6,964 $ 18,302 20.5% Forecast Best Buy's fiscal 2012 income statement using the following relations (assume "no change" for accounts not listed). Revenue growth 4.5% Cost of good sold/Revenue 74.8% Restructuring charges - cost of good sold $-- Selling, general and administrative expenses/Revenue Restructuring charges Goodwill and trademark impairment $-- Investment income and other $51 Investment impairment Interest expense $87 Income tax expense/Pretax income 34.4% Equity in income of affiliates $2 Net earnings attributable to noncontrolling interests/Net earnings including noncontrolling interests 7.5% Round all answers to the nearest whole number. Do not use negative signs with your answers in the income statement. 2012 Estimated $ 52,534 39,295 13,239 10,769 0 0 0 2,470 Income Statement, Fiscal Years Ended (5 millions) Revenue Cost of goods sold Restructuring charges - cost of goods sold Gross profit Selling general and administrative expenses Restructuring charges Goodwill and tradename impairment Operating income Other Income/expenses Investment income and other Interest expense Earnings before income tax expense and equity in income of affiliates Income tax expense Equity in income of affiliates Net earnings including noncontrolling interests Net earnings attributable to noncontrolling interests Net earnings attributable to Best Buy Co., Inc. 51 87 2,434 837 2 1,599 120 1,479 $ 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. No change 4.7% Short-term investments Receivables/Revenue Merchandise inventories/Revenue Other current assets/Revenue cary 11.7% 2.2% No change 4.7% 11.7% 2.2% 1.5% No change $25 $38 No change 0.9% Short-term investments Receivables/Revenue Merchandise inventories/Revenue Other current assets/Revenue CAPEX (Increase in gross Property and equipmenty/Revenue Goodwill Amortization expense for Tradenames Amortization expense for Customer relationships Equity and Other Investments Other Assets/Revenue Accounts payable/Revenue Unredeemed gift card liabilities/Revenue Accrued compensation and related expenses/Revenue Accrued liabilities/Revenue Accrued Income taxes/Revenue Long-term liabilities Noncontrolling interests Depreciation/Prior year gross PPE Amortization/Prior year intangible asset balance Dividends/Net income Long-term debt payments required in fiscal 2013 *increase by net income attributable to noncontrolling interests and assume no dividends 9.7% 0.9% 1.1% 2.9% 0.5% No change + 12.0% 18.7% 18.6% $37 . Round all answers to the nearest whole number. Do not use negative signs with your answers in the balance sheet. Balance Sheet ($ millions) 2012 Estimated Assets $ 2,005 X 22 2,481 x 6,587 X 1,127 x OX OX OX 0 x 2,454 0x Cash and cash equivalents Short-term investments - Receivables Merchandise inventories Other current assets Total current assets Property and equipment Gross property and equipment Less accumulated depreciation Net property and equipment Goodwill Tradenames, Net Customer Relationships, Net Equity and Other Investments Other assets Total assets Liabilities and equity Accounts payable Unredeemed gift card liabilities Accrued compensation and related expenses Accrued liabilities Accrued Income taxes Short-term debt Current portion of long-term debt OX OX 0 X OX $ OX OX OX OX OX 0 X OX OX 0 X OX $ OX $ 0x OX OX OX 0x OX OX OX Customer Relationships, Net Equity and Other Investments Other assets Total assets Liabilities and equity Accounts payable Unredeemed gift card liabilities Accrued compensation and related expenses Accrued liabilities Accrued income taxes Short-term debt Current portion of long-term debt Total current liabilities Long-term liabilities Long-term debt Best Buy Co., Inc. Shareholders' Equity Preferred stock, $1.00 par value: Authorized - 400,000 shares; Issued and outstanding - none Common stock, $0.10 par value: Authorized - 1.0 billion shares; Issued and outstanding - 392,590,000 and 418,815,000 shares, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive Income Total Best Buy Co., Inc. shareholders' equity Noncontrolling interests Total equity Total liabilities and Equity OX OX 0 OX OX OX OX OX OX 0x $ 0 x