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 (S millions) $ 50,272 $ 49,694 Revenue 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 Feb. 26, 2011 Feb. 27, 2010 ($ millions) Assets Cash and cash equivalents 51,103 $ 1,826 Short-term investments 22 90 Receivables 2,348 2,020 Merchandise inventories 5,897 5,486 Other current assets 1,103 1,144 Total current assets 10,473 10,566 Property and equipment Land and buildings 766 757 Leasehold improvements 2.318 2,154 Fixtures and equipment 4,701 4,447 Property under capital lease 120 95 Gross property and equipment 7,905 7,453 Less accumulated depreciation 4,082 3,383 Net property and equipment 3,823 4,070 Goodwill 2,454 2,452 Tradenames, Net 133 159 Customer Relationships, Net 203 279 Equity and Other investments 328 324 Other assets 435 452 Total assets $ 17,849 S 18,302 Liabilities and Equity Accounts payable $ 4,894 $ 5,276 Unredeemed giftcard liabilities 474 463 Accrued compensetion and related expenses 570 544 Accrued liabilities 1,471 1,681 Accrued income taxes 256 316 Short-term debt 557 663 Current portion of long-term debt 441 35 Total current liabilities 8,663 8,978 Long-term liabilities 1,183 1,256 Long-term debt 711 1,104 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 capical 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 690 644 Total equity 7,292 6,964 Total liabilities and shareholders' equity $ 17,849 S 18,302 Forecast Best Buy's fiscal 2012 income statement using the following relations (assume "no change" for accounts not listed). Revenue growth 5% Cost of good sold/Revenue 74.8% Restructuring charges - cost of good sold Selling general and administrative expenses/Revenue 20.5% Restructuring charges Goodwill and trademark impairment S-- Investment income and other $51 Investment impairment Interest expense S(87) Income tax expense/Pretax income 34.4% Equity in income of affiliates $2 Net earnings attributable to noncontrolling interests/Net earnings including noncontrolling interests Round all answers to nearest whole number. Do not use negative signs with your answers in the income statement. 2012 Income Statement, Fiscal Years Ended ($ millions) Estimated Revenue 51,780 X Cost of goods sold 38,732 X Restructuring charges - cost of goods sold Gross profit 13,049 x Selling, general and administrative expenses Restructuring charges Goodwill and tradename impairment Operating income Other income/expenses Investment income and other Interest income 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. 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 4.7% Merchandise inventories/Revenue 11.7% Other current assets/Revenue 2.2% CAPEX (Increase in gross Property and equipment)/Revenue 1.5% Goodwill No change Amortization expense for Tradenames $25 Amortization expense for Customer relationships $38 Equity and Other Investments No change Other Assets/Revenue 0.9% Accounts payable/Revenue 9.7% Unredeemed gift card liabilities/Revenue 0.9% Accrued compensation and related expenses/Revenue 1.19% Accrued liabilities/Revenue 2.9% Accrued income taxes/Revenue 0.5% Long-term liabilities 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. Round all answers to the nearest whole number. Do not use negative signs with your answers in the balance sheet Balance Sheet 2012 (S millions) Estimated Assets Cash and cash equivalents Short-term invesiments Receivatiles Merchandise inventories Other curtent assets Total currens assets Property and equipmen Gross property and equipment Less accumulated depreciation Net property and eupmers Goodwill Tradenemes, Net Cusiomer Relatianships Ne Equity and Other Inveaments Ocher assets Total assets Liabilities and equity Accounts payable Linvedeened gilt card liabilies Accrued compersation and related expenses Accrued libilicies Accrued incore taes Shortterm debt Curreni portion of long-serm debi Total current labilties Lang term ablios Long term derbe Best Buy Co, In. Shareholders Cquity Prelerred stock, S1.00 par value Authoriand - 400,000 shares Issued and outsianding none Comman stock, $0.10 par value Authurized - 10 billion shares; Issued and oustanding 392,590.000 and 418,R15,000 shares, respectively Additional paid in capital Resained earnings Acculated oaher comprehensive income Tutal Dest Buy Ca, Inc. shareholders' equity Noncontroling inerests Total equily Tulal liabiles and Equity