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Comparative income statements and balance sheets for Best Buy are shown Best Buy below ($ millions). Year 2 Year 1 $15,326 12,267 $12.494 10,101 3,059 Income Statement Net sales Cost of goods Gross profit Selling, general and administrative expense. Depreciation and amortization expense. Income before tax Income tax expense Net income 2,251 167 2,393 1,728 103 562 215 $ 347 641 245 $ 396 Outstanding shares 208 200 Balance Sheet Cash. Receivables Inventories Other current assets. Total current assets. Year 2 $ 746 313 1,767 102 2,928 Year 1 $ 751 262 1,184 41 2,238 1,093 395 Property, plant, and equipment Accumulated depreciation. Net property, plant, and equipment. Other noncurrent assets. Total assets 1.987 543 1,444 466 $ 4,838 698 59 $ 2,995 Accounts payable and accrued liabilities $ 2,473 Short-term debt and current maturities of long-term debt...... 114 Income tax liabilities 127 Total current liabilities 2,714 Long-term liabilities 122 Long-term debt 181 Total long-term liabilities. 303 $ 1,704 16 65 1,785 100 15 115 20 576 1.225 20 247 828 Common stock. Capital surplus Retained earnings Shareholders' equity Total liabilities and equity 1.821 $ 4,838 1,095 $ 2,995 Required a. Use the following ratios to prepare a projected income statement, balance sheet, and statement of cash flows for Year 3. HOMEWORK-4 Sales growth. 22.67% Gross profit margin 19.96% Selling, general, and administrative expense/Sales. 14.69% Depreciation expense/Prior-year PPE gross... 15.28% Income tax expense/Pretax income 38.22% Accounts receivable turnover (Sales/Accounts receivable) 48.96 Inventory turnover (Cost of goods sold/Inventory). 6.94 Accounts payable turnover (Cost of goods sold/Accounts payable). 4.96 Taxes payable/Tax expense. 51.84% Total assets/Stockholders' equity (financial leverage). 2.55 Dividends per share... $ 0.00 Capital expenditures/Sales. 6.71% b. Based on your initial projections, how much external financing (long-term debt and/or stockholders' equity) will Best Buy need to fund its growth at projected increases in sales
