The following information relates to Best Buy and Circuit City Stores, Inc., for their 2003 and 2002 fiscal years.

Required:

a. Compute the following ratios for the companies’ 2003 fiscal years:
(1) Current ratio.
(2) Average number of days to sell inventory. (Use average inventory.)
(3) Debt to assets ratio.
(4) Return on investment. (Use average assets and use “earnings from continuing operations” rather than “net earnings.”)
(5) Gross margin percentage.
(6) Asset turnover. (Use average assets.)
(7) Return on sales. (Use “earnings from continuing operations” rather than “net earnings.”)
(8) Plant assets to long-term debt ratio.

b. Which company appears to be more profitable? Explain your answer and identify which of the ratio(s) from Requirement a you used to reach your conclusion.

c. Which company appears to have the higher level of financial risk? Explain your answer and identify which of the ratio(s) from Requirement a you used to reach your conclusion.

d. Which company appears to be charging higher prices for its goods? Explain your answer and identify which of the ratio(s) from Requirement a you used to reach your conclusion.

e. Which company appears to be the more efficient at using its assets? Explain your answer and identify which of the ratio(s) from Requirement a you used to reach your conclusion.

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BEST BUY CO., INC. Selected Financial Information (Amounts in millions, except per share amounts) March 1, March 2, 2003 2002 Total current assets $ 4,867 $ 4,600 Merchandise inventories 2,046 1,875 Property and equipment, net of depreciation 2,062 1,661 Total assets 7,663 7,367 Total current liabilities 3,793 3,705 Total long-term liabilities. 1,140 1,141 Total liabilities 4,933 4,846 Total shareholders' equity 2,730 2,521 Total liabilities and shareholders' equity 7,663 7,367 Revenue 20,946 17,711 Cost of goods sold 15,710 13,941 Gross profit 5,236 3,770 Operating income 1,010 908 Interest expense 30 21 Earings from continuing operations Income tax expense before income tax expense Earnings from continuing operations. Net earnings Basic earnings per share 1,014 926 392 356 622 570 99 570 $ 0.31 $ 1.80