Best Buy
Transcript: 2/26/2011 2/27/2010 2/28/2009 36.8160 37.4942 37.5756 Net income is about 2% of Best Buy's sales for all 3 years. Cost of Sales takes a big part of its revenue. Profit Margin 2.54 2.65 2.23 02/26/2011 02/27/2010 02/28/2009 02/26/2011 02/27/2010 02/28/2009 Bestbuy was not able to its current bills in 2009, but it was able to recover from it in 2010 and went back down in 2011. 02/26/2011 02/27/2010 02/28/2009 02/26/2011 02/27/2010 02/28/2009 02/26/2011 02/27/2010 02/28/2009 Profitability Ratios Return on Shareholders' Equity Profit Margin Background 02/26/2011 02/27/2010 02/28/2009 Gross Margin Percentage Companies with lower debt/equity ratios are less risky than those with higher such ratios. From 2010 to 2011: Sales increased by only 1.16% and Direct Costs went up by about 0.27%. Selling General Administrative expense increased by 4.58%. Strenghts Measure of a liquidity or the ability to pay a company's current bills. Demostrate the ability of a firm to pay its current bills Working Capital ROE % (Net) 19.82% 24.09% 22.04% Best Buy is getting less effective in collecting receivables. Concentrated supplier base Constrained Credit availability Product Recalls 2/26/2011 2/27/2010 2/28/2009 6.6083 7.3316 7.1910 4. Account receivable turnover measures the number of times a year a company collects its receivables. LT Debt to Assets Ratio that measures a company's return on its investment by shareholders. It is usually stated in percentage terms, and higher is better. Return on assets is generally stated in percentage terms, and higher is better, all else equal. Current Ratio 1.2089 1.1769 0.9712 The outlook for the Consumer Electronics Stores industry looks bright, with revenue forecast to increase at an average annual rate of 3.1% to $92.2 billion in the five years to 2016. Improved economic conditions will likely boost consumer spending, encouraging consumers to spend more on industry goods. In fact, revenue is projected to increase 2.4% in 2012 alone. 2/26/2011 2/27/2010 2/28/2009 34.2747 26.5691 22.9813 Best Buy is doing great in paying their bill. In fact, they are doing slightly better over the past three years. SWOT 02/26/2011 02/27/2010 02/28/2009 Financial ratios that tells a user how many cents per dollar of sales, assets or equity the firm has earned. Return on Assets 5. Days in receivable indicates how many days Best Buy takes to collect its receivables. Solvency Ratios 02/26/2011 02/27/2010 02/28/2009 The company's revenue it keeps when all expenses or other forms of income have been considered, regardless of their nature. From 2009 to 2010: Total Liabilities increased by 7.14% and Total Equity increased by 36.12%. Best buy is not doing well, because the ratio is getting low in 2011. Income Statement The expectation is that this is a positive number, showing that the firm has enough assets on its balance sheet to pay its current bills. Since Bestbuy is doing great with their debts, it is pretty obvious that their Long Term Debts to Assets are also decreasing every year. Quick Ratio Provides information on the ability of the firm to pay its long-term debt. ROA % (Net) 7.08% 7.74% 7.04% Balance Sheet 3. Days in inventory measures the number of days Best Buy takes to sell the inventory and to be converted to cash. Threats Though Bestbuy is doing great with their debts, they are taking more time to pay its interest. 02/26/2011 02/27/2010 02/28/2009 Vertical Analysis 6. Account payable turnover measures how effectively Best Buy pays its own bills. The higher the ratio, the more cushion the firm has to have to comfortably meet interest payments. Best buy is not doing good with its interest. Best Buy is not doing great of generating sale form assets. 2/26/2011 2/27/2010 2/28/2009 2.7812 2.9122 3.1497 Best buy is not doing very good in 2011 since it decreases a little from 2010. Promotions from within company Ex: Current CEO has been with Best Buy almost 30 years. Current Ratio The lower the debt, the better for the company. 2.Inventory turnover measures how much of a Best Buy’s inventory can be sold (converted to cash). 2/26/2011 2/27/2010 2/28/2009 23.0183 25.5628 37.2487 Times Interest Earned 2/26/2011 2/27/2010 2/28/2009 55.2338 49.7847 50.7579 Quick Ratio 0.4009 0.4384 0.2818 02/26/2011 02/27/2010 02/28/2009 Summary Inventory makes up a big portion of its Total Current Assets. Financed with more debt than equity. Best buy is doing great with its debt since it is decreasing every year. Debt to Equity 1.4478 1.6281 2.4086 Overall, Best Buy is getting less and less effective in the operation. Bestbuy is able to handle its current bills quickly every year. Working Capital 1810 1588 -243 Debt to Equity Horizontal Analysis Growing online sales Expanding presence Based on 3/5/12, Industry's profit margin is 2.40 and Best Buy's ratio is 1.27, so the company is below the industry's average. The higher the level of long term debt, the more important it is for a company to have positive revenue and steady cash
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