Question

Best Buy Co, Inc., is a leading retailer specializing in consumer electronics. A condensed income statement and balance sheet for the fiscal year ended January 28, 2017, are shown below. Best Buy Co, Inc. Balance Sheet At January 28, 2017 ($ in millions) Assets Current assets: Cash and cash equivalents Short-term investments Accounts receivable (net) Inventory Other current assets Total current assets Long-term assets Total assets Liabilities and Shareholders' Equity Current liabilities: Accounts payable Other current liabilities Total current liabilities Long-term liabilities Shareholders' equity Total liabilities and shareholders' equity $ 2,240 1,681 1,347 4.864 384 10.516 3,340 $13,856 $ 4,984 2. 138 7,122 2,025 4,709 $13,856 Best Buy Co, Inc. Income Statement For the Year Ended January 28, 2017 ($ in millions) Revenues $39,403 Costs and expenses 37,549 Operating income 1.854 Other income (expense) (38) Incone before incone taxes 1.816 Income tax expense 609 Net income $ 1,207

Answer 1

1. Current Ratio = Current Assets / Current Liabilities
   = 10516 / 7122
   = 1.48 : 1
2. Acid Test Ratio = (Cash + Cash Equivalents + Marketable Securities +
   Current Account Receivables) / Total Current Liabilities
   = ( 2240 + 1681 + 1347 ) / 7122
   = 5268 / 7122
   = 0.74 : 1
   Alternatively,
   =  ( 2240 + 1681 + 1347 + 384) / 7122
   = 5652 / 7122
   = 0.79 : 1
3. Debt to Equity Ratio = Total Liabilities / Shareholders Equity
   = 9147 / 4709
   = 1.94 : 1
4. Interest Earned Ratio = Earnings before Interest and Tax / Interest Expense
   = (1854 - 38 + 72 ) / 72
   = 1888 / 72
   = 26.22 times