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, Feb. 26, 2011 Feb. 27, 2010 Fiscal Years Ended ($ millions) 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 87 94 2,078 2,195 714 802 2 1 1,366 1,394 77 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 89 $1,277 Net earnings attributable to Best Buy Co., Inc. $ 1,317 Assets Cash and cash equivalents Short-term investments Receivables Merchandise inventories Other current assets Total current assets Property and equipment Land and buildings Leasehold improvements Fixtures and equipment Property under capital lease 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 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 Balance Sheet ($ millions) Feb. 26, 2011 Feb. 27, 2010 $ 1,103 $ 1,826 22 90 2,348 2,020 5,897 5,486 1,103 1,144 10,473 10,566 766 757 2,318 2,154 4,701 4,447 120 95 7,905 7,453 4,082 3,383 3,823 4,070 2,454 2,452 133 159 203 279 328 324 435 452 $ 17,849 $18,302 $ 4,894 $5,276 474 463 570 544 1,471 1,681 256 316 557 663 441 35 8,663 8,978 1,183 1,256 711 1,104 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 39 42 Additional paid-in capital 18 441 Retained earnings 6,372 5,797 Accumulated other comprehensive income 173 40 Total Best Buy Co., Inc. shareholders' equity 6,602 6,320 Noncontrolling interests Total equity Total liabilities and shareholders' equity 690 7,292 644 6,964 $ 17,849 $ 18,302 Forecast Best Buy's fiscal 2012 income statement using the following relations (assume "no change" for accounts not listed). Revenue growth Cost of good sold/Revenue Restructuring charges - cost of good sold Selling, general and administrative expenses/Revenue Restructuring charges Goodwill and trademark impairment Investment income and other 4.5% 74.8% $-- 20.5% $-- $-- $51 Investment impairment $-- Interest expense $87 Income tax expense/Pretax income 34.4% Equity in income of affiliates $2 Net earnings attributable to noncontrolling interests/Net earnings including noncontrolling interests 7.5% Round all answers to the nearest whole number. Do not use negative signs with your answers in the income statement. Income Statement, Fiscal Years Ended ($ millions) 2012 Estimated Revenue $ 53,037 x Cost of goods sold 39,672 x Restructuring charges - cost of goods sold 0 13,365 x Gross profit Selling, general and administrative expenses Restructuring charges Goodwill and tradename impairment Operating income Other income/expenses Investment income and other 10,873 x 0 0 2,493 x 51 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 (87) x 2,457 x 854 x 2 1,614 x Net earnings attributable to noncontrolling interests 121 x Net earnings attributable to Best Buy Co., Inc. $ 1,493 x 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. Short-term investments No change Receivables/Revenue Merchandise inventories/Revenue Other current assets/Revenue CAPEX (Increase in gross Property and equipment)/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 4.7% 11.7% 2.2% 1.5% No change $25 $38 No change 0.9% 9.7% 0.9% 1.1% 2.9% 0.5% No change Noncontrolling interests Depreciation/Prior year gross PPE 12.0% Amortization/Prior year intangible asset balance 18.7% Dividends/Net income 18.6% Long-term debt payments required in fiscal 2013 $37 *increase by net income attributable to noncontrolling interests and assume no dividends Round all answers to the nearest whole number. Do not use negative signs with your answers in the balance sheet. Assets Cash and cash equivalents Short-term investments Receivables Merchandise inventories Other current assets Total current assets Property and equipment Gross property and equipment Less accumulated depreciation Net property and equipment Goodwill Tradenames, Net Customer Relationships, Net Equity and Other Investments Other assets Total assets Liabilities and equity Accounts payable Unredeemed gift card liabilities Accrued compensation and related expenses Accrued liabilities Accrued income taxes Short-term debt Current portion of long-term debt Total current liabilities Balance Sheet ($ millions) 2012 Estimated $ 0 x 0x 0x 0x 0x 0x 0 x 0x 0 x 0x 0x 0x 0x 0 x $ 0x 0 x 0 x 0 0x 0x 0 x 0x 0x 0x 0 x 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 0 Common stock, $0.10 par value: Authorized - 1.0 billion shares; Issued and outstanding - 392,590,000 and 0 x 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 0 x 0x 0 0 0 x 0x $ 0 x