Best Buy Co., Inc.s consolidated balance sheets from its 2007 annual report are presented in

Exhibit 5-3.

Required a. Using the balance sheets, prepare a vertical common-size analysis for 2007 and 2006. Use total assets

as a base.

b. Using the balance sheets, prepare a horizontal common-size analysis for 2007 and 2006. Use 2006 as

the base.

c. Comment on significant trends that appear in (a) and (b).

6:27 PM OOOOO 51 Chapter 5 Basics of Arualysis Merchandising (retail-wholesale) firms sell products purchased from other firms. A principal asset is inventory, which consists of merchandise inventories. For some merchandising firms, large amount of sales may be for cash. In such cases, the receivables balance will be relatively low. Other merchandising firms have a large amount of sales charged but also accept credit 5-3 BEST BUY CO., INC. Merchandising Firm Best Buy Co., Inc. Consolidated Balance Sheets ($ in millions, except per share amounts) March 3, 2007 February 25, 2006 Assets $ 748 $ 1.205 2,588 548 4,028 712 3,041 449 3,338 409 Current 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 9,081 7.985 580 705 1,540 2,627 32 1,325 2,898 33 4,836 2,124 2,712 557 4,904 1,966 2,938 919 81 318 233 $ 13,570 44 218 348 $ 11,864 $ 3,934 496 $ 3,234 469 332 354 990 878 489 703 41 Less accumulated depreciation Net property and equipment Goodwill Tradenames Long-Term Investments Other Assets Total Assets Liabilities and Shareholders' Equity Current Liabilities Accounts payable Unredeemed gift card liabilities Accrued compensation and related expenses Accrued liabilities Accried income taxes Short-term debt Current portion of long-term debt Total current liabilities Long-Term Liabilities Long-Term Debt Minority Interests Shareholders' Equity Preferred stock, 51.00 par value: Authorized-400,000 shares; Issued and outstanding-none Common stock, S.10 par value; Authorized-1 billion shares Issued and outstanding480,655,000 and 485,098,000 shares, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive income Total shareholders' equity Total Liabilities and Shareholders' Equity 19 418 6,301 6,056 373 178 590 35 48 430 5,507 49 643 4,304 216 261 5.257 6,201 $13,570 $11,864 on Inc. is a specialty retailer of consumer electronics, home-office products, entertainment software, appliances and a ees 10-K Chapter 3 Basics of Analysis eit 5-3 BEST BUY CO., INC. (Continued) Best Buy Co., Inc