Direct Computation of Nonoperating Return with Noncontrolling Interest

Balance sheets and income statements for Best Buy Co., Inc. follow.

Consolidated Statements of Earnings
For Fiscal Years Ended ($ millions)	February 27, 2010	February 28, 2009	March 1, 2008
Revenue	$ 49,694	$ 45,015	$ 40,023
Cost of goods sold	37,534	34,017	30,477
Restructuring charges - cost of goods sold	--	--	--
Gross Profit	12,160	10,998	9,546
Selling, general and administrative expenses	9,873	8,984	7,385
Restructuring charges	52	78	--
Goodwill and tradename impairment	--	66	--
Operating income	2,235	1,870	2,161
Other income (expense)
Investment income and other	54	35	129
Investment impairment	--	(111)	--
Interest expense	(94)	(94)	(62)
Earnings before income tax expense and equity in income of affiliates	2,195	1,700	2,228
Income tax expense	802	674	815
Equity in income of affiliates	1	7	(3)
Net earnings including noncontrolling interest	1,394	1,033	1,410
Net income attributable to noncontrolling interest	(77)	(30)	(3)
Net income attributable to Best Buy Co., Inc.	$ 1,317	$ 1,003	$ 1,407

Consolidated Balance Sheets
($ millions, except footnotes)	February 27, 2010	February 28, 2009
Assets
Current assets
Cash and cash equivalents	$ 1,826	$ 498
Short-term investments	90	11
Receivables	2,020	1,868
Merchandise inventories	5,486	4,753
Other current assets	1,144	1,062
Total current assets	10,566	8,192
Property and equipment
Land and buildings	757	755
Leasehold improvements	2,154	2,013
Fixtures and equipment	4,447	4,060
Property under capital lease	95	112
	7,453	6,940
Less: Accumulated depreciation	3,383	2,766
Property and equipment, net	4,070	4,174
Goodwill	2,452	2,203
Tradenames, net	159	173
Customer relationships, net	279	322
Equity and other investments	324	395
Other noncurrent assets	452	367
Total assets	$ 18,302	$ 15,826
Liabilities and equity
Current liabilities
Accounts payable	$ 5,276	$ 4,997
Unredeemed gift card liabilities	463	479
Accrued compensation and related expenses	544	459
Accrued liabilities	1,681	1,382
Accrued income taxes	316	281
Short-term debt	663	783
Current portion of long-term debt	35	54
Total current liabilities	8,978	8,435
Long-term liabilities	1,256	1,109
Long-term debt	1,104	1,126
Equity
Best Buy Co., Inc. Shareholders' equity
Preferred stock, $1.00 par value	--	--
Common stock, $0.10 par value	42	41
Additional paid-in capital	441	205
Retained earnings	5,797	4,714
Accumulated other comprehensive income (loss)	40	(317)
Total Best Buy Co., Inc. shareholders' equity	6,320	4,643
Noncontrolling interest	644	513
Total equity	6,964	5,156
Total liabilities and equity	$ 18,302	$ 15,826

Assume that Best Buy Co's return on equity (ROE) for 2010 is 24.03% and its return on net operating assets (RNOA) is 21.08%. Assume that the combined federal and state statutory tax rate is 37%.

a. Compute net nonoperating expense (NNE) and net operating profit after tax (NOPAT). Assume that Equity and other investments are operating. Round to the nearest whole number, if applicable. 2010 NNE = Answer($ millions) 2010 NOPAT = Answer($ millions)

b. Compute net nonoperating obligations (NNO) for 2010 and 2009. 2010 NNO = Answer($ millions) 2009 NNO = Answer($ millions)

c. Compute financial leverage (FLEV). Round answer to four decimal places. 2010 FLEV = Answer

d. Compute NNEP and Spread. Round answers to two decimal places (example: 0.12345 = 12.35%). 2010 NNEP = Answer% 2010 Spread = Answer%

e. Compute the noncontrolling interest ratio (NCI ratio). Round answer to four decimal places. 2010 NCI ratio = Answer

f. Confirm the relation: ROE = [RNOA + (FLEV Spread)] NCI ratio. 2010 ROE =Answer% = [Answer%+(Answer X Answer%)] X Answer