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 Assets Cash and cash equivalents $ 1,103 $ 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 $ 18,302 Liabilities and Equity Accounts payable $ 4,894 $ 5,276 Unredeemed giftcard liabilities 474 463 Accrued compensation 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 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 690 644 Total equity 7,292 6,964 Total liabilities and shareholders' equity $ 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 5 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 $ Investment income and other $51 Investment impairment $ Interest expense $87 Income tax expense Pretax income 34 4 Equity in income of affiliates $2 Net earnings attributable to noncontrolling interests Net earnings including noncontrolling interests 7 5 Round all answers to the nearest whole number Do not use negative signs with your answers in the income statement Income Statement, Fiscal Years Ended ($ millions) 2012 Estimated Revenue Answer Cost of goods sold Answer Restructuring charges cost of goods sold Answer Gross profit Answer Selling, general and administrative expenses Answer Restructuring charges Answer Goodwill and tradename impairment Answer Operating income Answer Other income expenses Investment income and other Answer Interest expense Answer Earnings before income tax expense and equity in income of affiliates Answer Income tax expense Answer Equity in income of affiliates Answer Net earnings including noncontrolling interests Answer Net earnings attributable to noncontrolling interests Answer Net earnings attributable to Best Buy Co , Inc Answer 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 1 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 $37 increase by net income attributable to noncontrolling interests and assume no dividends Round all answers to the nearest whole number Do not use negative signs with your answers in the balance sheet Balance Sheet ($ millions) 2012 Estimated Assets Cash and cash equivalents Answer Short term investments Answer Receivables Answer Merchandise inventories Answer Other current assets Answer Total current assets Answer Property and equipment Gross property and equipment Answer Less accumulated depreciation Answer Net property and equipment Answer Goodwill Answer Tradenames, Net Answer Customer Relationships, Net Answer Equity and Other Investments Answer Other assets Answer Total assets Answer Liabilities and equity Accounts payable Answer Unredeemed gift card liabilities Answer Accrued compensation and related expenses Answer Accrued liabilities Answer Accrued income taxes Answer Short term debt Answer Current portion of long term debt Answer Total current liabilities Answer Long term liabilities Answer Long term debt Answer Best Buy Co , Inc Shareholders' Equity Preferred stock, $1 00 par value Authorized 400,000 shares Issued and outstanding none Answer Common stock, $0 10 par value Authorized 1 0 billion shares Issued and outstanding 392,590,000 and 418,815,000 shares, respectively Answer Additional paid in capital Answer Retained earnings Answer Accumulated other comprehensive income Answer Total Best Buy Co , Inc shareholders' equity Answer Noncontrolling interests Answer Total equity Answer Total liabilities and Equity Answer b What does the forecasted adjustment to balance the accounting equation from part a reveal to us about the forecasted cash balance and related financing needs of the company Explain Best Buy will generate sufficient cash for the coming year The cash balance decreases fairly significantly, we could adjust marketable securities, increasing total assets Best Buy will generate sufficient cash for the coming year The cash balance increases fairly significantly, we could adjust marketable securities, leaving total assets unchanged Best Buy will not generate sufficient cash for the coming year The cash balance decreases fairly significantly, we could adjust marketable securities, leaving total assets unchanged Best Buy will not generate sufficient cash for the coming year The cash balance decreases fairly significantly, we could adjust short term debt, increasing total assets

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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,

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
Assets
Cash and cash equivalents	$ 1,103	$ 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	$ 18,302
Liabilities and Equity
Accounts payable	$ 4,894	$ 5,276
Unredeemed giftcard liabilities	474	463
Accrued compensation 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 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	690	644
Total equity	7,292	6,964
Total liabilities and shareholders' equity	$ 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	5.5%
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	$--
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.

Income Statement, Fiscal Years Ended ($ millions)	2012 Estimated
Revenue	Answer
Cost of goods sold	Answer
Restructuring charges - cost of goods sold	Answer
Gross profit	Answer
Selling, general and administrative expenses	Answer
Restructuring charges	Answer
Goodwill and tradename impairment	Answer
Operating income	Answer
Other income/expenses
Investment income and other	Answer
Interest expense	Answer
Earnings before income tax expense and equity in income of affiliates	Answer
Income tax expense	Answer
Equity in income of affiliates	Answer
Net earnings including noncontrolling interests	Answer
Net earnings attributable to noncontrolling interests	Answer
Net earnings attributable to Best Buy Co., Inc.	Answer

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	1.1%
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.

Balance Sheet ($ millions)	2012 Estimated
Assets
Cash and cash equivalents	Answer
Short-term investments	Answer
Receivables	Answer
Merchandise inventories	Answer
Other current assets	Answer
Total current assets	Answer
Property and equipment
Gross property and equipment	Answer
Less accumulated depreciation	Answer
Net property and equipment	Answer
Goodwill	Answer
Tradenames, Net	Answer
Customer Relationships, Net	Answer
Equity and Other Investments	Answer
Other assets	Answer
Total assets	Answer
Liabilities and equity
Accounts payable	Answer
Unredeemed gift card liabilities	Answer
Accrued compensation and related expenses	Answer
Accrued liabilities	Answer
Accrued income taxes	Answer
Short-term debt	Answer
Current portion of long-term debt	Answer
Total current liabilities	Answer
Long-term liabilities	Answer
Long-term debt	Answer
Best Buy Co., Inc. Shareholders' Equity
Preferred stock, $1.00 par value: Authorized - 400,000 shares; Issued and outstanding - none	Answer
Common stock, $0.10 par value: Authorized - 1.0 billion shares; Issued and outstanding- 392,590,000 and 418,815,000 shares, respectively	Answer
Additional paid-in capital	Answer
Retained earnings	Answer
Accumulated other comprehensive income	Answer
Total Best Buy Co., Inc. shareholders' equity	Answer
Noncontrolling interests	Answer
Total equity	Answer
Total liabilities and Equity	Answer

b. What does the forecasted adjustment to balance the accounting equation from part a reveal to us about the forecasted cash balance and related financing needs of the company? Explain.

Best Buy will generate sufficient cash for the coming year. The cash balance decreases fairly significantly, we could adjust marketable securities, increasing total assets.

Best Buy will generate sufficient cash for the coming year. The cash balance increases fairly significantly, we could adjust marketable securities, leaving total assets unchanged.

Best Buy will not generate sufficient cash for the coming year. The cash balance decreases fairly significantly, we could adjust marketable securities, leaving total assets unchanged.

Best Buy will not generate sufficient cash for the coming year. The cash balance decreases fairly significantly, we could adjust short-term debt, increasing total assets.