Question

Forecast the Statement of Cash Flows
Following are the income statements and balance sheets of Best Buy Co., Inc.

Income Statement, Fiscal Years Ended ($ millions)	2012 Estimated	Feb. 26, 2011
Revenue	$53,037	$50,272
Cost of goods sold	39,672	37,611
Restructuring charges - cost of goods sold	--	24
Gross profit	13,365	12,637
Selling, general and administrative expenses	10,873	10,325
Restructuring charges	--	198
Goodwill and tradename impairment	--	--
Operating income	2,492	2,114
Other income (expenses)
Investment income and other	51	51
Interest expense	(87)	(87)
Earnings before income tax expense and equity in income of affiliates	2,456	2,078
Income tax expense	845	714
Equity in income of affiliates	2	2
Net earnings including noncontrolling interests	1,613	1,366
Net earnings attributable to noncontrolling interests	(121)	(89)
Net earnings attributable to Best Buy Co., Inc.	$1,492	$1,277

Balance Sheet ($ millions)	2012 Estimated	Feb. 26, 2011
Assets
Cash and cash equivalents	$1,167	$1,103
Short-term investments	852	22
Receivables	2,493	2,348
Merchandise inventories	6,205	5,897
Other current assets	1,167	1,103
Total current assets	11,884	10,473
Gross property and equipment	8,701	7,905
Less accumulated depreciation	5,031	4,082
Net property and equipment	3,670	3,823
Goodwill	2,454	2,454
Tradenames, Net	108	133
Customer Relationships, Net	165	203
Equity and Other Investments	328	328
Other assets	477	435
Total assets	$ 19,086	$ 17,849
Liabilities and Equity
Accounts payable	$ 5,145	$ 4,894
Unredeemed giftcard liabilities	477	474
Accrued compensation and related expenses	583	570
Accrued liabilities	1,538	1,471
Accrued income taxes	265	256
Short-term debt	557	557
Current portion of long-term debt	37	441
Total current liabilities	8,602	8,663
Long-term liabilities	1,183	1,183
Long-term debt	674	711
Best Buy Co., Inc. Shareholders' Equity
Preferred stock, $ 1.00 par value: Authorized-400,000 shares; Issued and outstanding-none	--	--
Common stock $0.10 par value: Authorized-1.0 billion shares; Issued and outstanding-392,590,000 and 418,815,000 shares, respectively	39	39
Additional paid-in capital	18	18
Retained earnings	7,586	6,372
Accumulated other comprehensive income	173	173
Total Best Buy Co., Inc. shareholders' equity	7,816	6,602
Noncontrolling interests	811	690
Total equity	8,627	7,292
Total liabilities and shareholders' equity	$19,086	$17,849

CAPEX (Increase in gross Property and equipment)/Net sales	1.50%
Depreciation expense/Prior year gross PPE	12.00%
Dividends/Net income	18.60%
Long-term debt payments required in fiscal 2013	$37

Refer to the financial information above for Best Buy Co., Inc. Prepare a forecast of its financial year 2012 statement of cash flows. (Hint: Use net income including noncontrolling interests to begin the statement of cash flows. Use negative signs in answers when appropriate.)

Round all answers to the nearest whole number. Use negative signs with answers, when appropriate.

Best Buy Forecasted Statement of Cash Flows
($ millions)	2012 Estimated
Net income including noncontrolling interests	Answer
Add: depreciation	Answer
Add: amortization	Answer
Change in Accounts receivable	Answer
Change in Inventories	Answer
Change in Other current assets	Answer
Change in Other long-term assets	Answer
Change in Accounts payable	Answer
Change in Unredeemed gift card liabilities	Answer
Change in Accrued compensation and related expenses	Answer
Change in Accrued liabilities	Answer
Change in Accrued income taxes	Answer
Net cash from operating activities	Answer
Capital expenditures	Answer
Increase in Short-term investments	Answer
Net cash from investing activities	Answer
Dividends	Answer
Payments of LT debt	Answer
Net cash from financing activities	Answer
Net change in cash	Answer
Beginning cash	Answer
Ending cash	Answer

Answer 1

Best Buy Forecasted Statement of Cash Flows
($ millions)	2012 Estimated
Net income including noncontrolling interests	$  1,613.00
Add: depreciation	$     949.00
Add: amortization	$       63.00
Change in Accounts receivable	$   (145.00)
Change in Inventories	$   (308.00)
Change in Other current assets	$     (64.00)
Change in Other long-term assets	$     (42.00)
Change in Accounts payable	$     251.00
Change in Unredeemed gift card liabilities	$         3.00
Change in Accrued compensation and related expenses	$       13.00
Change in Accrued liabilities	$       67.00
Change in Accrued income taxes	$         9.00
Net cash from operating activities		$       2,409
Capital expenditures	$   (796.00)
Increase in Short-term investments	$   (830.00)
Net cash from investing activities		$      (1,626)
Dividends (1492 x 18.60%)	$   (277.51)
Payments of LT debt	$   (441.00)
Net cash from financing activities		$         (719)
Net change in cash		$            64
Beginning cash		$       1,103
Ending cash		$       1,167

E39 4 x fx 198 1 Forecast the Statement of Cash Flows 2 Following are the income statements and balance sheets of Best Buy Co., Inc. 3 Income Statement, 2012 Feb. 26, 4 Fiscal Years Ended ($ millions) Estimated 2011 5 Revenue $53,037 $50,272 6 Cost of goods sold 39,672 37,611 7 Restructuring charges - cost of goods sold 24 8 Gross profit 13,365 12,637 9 Selling, general and administrative expenses 10,873 10,325 10 Restructuring charges 11 Goodwill and tradename impairment 12 Operating income 2,492 2,114 13 Other income (expenses) 14 Investment income and other 15 Interest expense -87 16 Earnings before income tax expense and equity in incon 2,078 17 Income tax expense 714 18 Equity in income of affiliates 19 Net earnings including noncontrolling interests 1,613 1,366 20 Net earnings attributable to noncontrolling interests -121 21 Net earnings attributable to Best Buy Co., Inc. $1,492 $1,277 51 51 -87 2,456 845 -89 22 2012 Feb. 26, Estimated 2011 23 Balance Sheet 24 ($ millions) 25 Assets 26 Cash and cash equivalents 27 Short-term investments 28 Receivables 29 Merchandise inventories 30 Other current assets 31 Total current assets 32 Gross property and equipment 33 Less accumulated depreciation 34 Net property and equipment 35 Goodwill 36 Tradenames, Net 37 Customer Relationships, Net 38 Equity and Other Investments 39 Other assets 40 Total assets $1,167 852 2,493 6,205 1,167 11,884 8,701 5,031 3,670 2,454 108 165 $1,103 22 2,348 5,897 1,103 10,473 7,905 4,082 3,823 2,454 133 203 328 328 477 $19,086 435 $17,849


4894 474 570 1471 256 557 441 8663 1183 711 37 39 18 6372 173 6602 690 7292 17849 42 Accounts payable 5145 43 Unredeemed giftcard liabilities 477 44 Accrued compensation and related expenses 583 45 Accrued liabilities 1538 46 Accrued income taxes 265 47 Short-term debt 557 48 Current portion of long-term debt 49 Total current liabilities 8602 50 Long-term liabilities 1183 51 Long-term debt 674 52 Best Buy Co., Inc. Shareholders' Equity 53 Preferred stock, $ 1.00 par value: Authorized-400,000 shares; Issued and outstanding-none 54 Common stock $0.10 par value: Authorized-1.0 billion shares; Issued and outstanding-392,590,000 and 418,815, 39 55 Additional paid-in capital 18 56 Retained earnings 7586 57 Accumulated other comprehensive income 173 58 Total Best Buy Co., Inc. shareholders' equity 7816 59 Noncontrolling interests 811 60 Total equity 8627 61 Total liabilities and shareholders' equity 19086 62 Refer to the financial information above for Best Buy Co., Inc. Prepare a forecast of its financial year 2012 stater 63 Round all answers to the nearest whole number. Use negative signs with answers, when appropriate. 64 Best Buy Forecasted Statement of Cash Flows 65 ($ millions) 2012 Estimated 66 Net income including noncontrolling interests =B19 67 Add: depreciation =B33-C33 68 Add: amortization = (C37-B37)+(C36-B36) 69 Change in Accounts receivable =C28-B28 70 Change in Inventories =C29-B29 71 Change in Other current assets =C30-B30 72 Change in Other long-term assets =C39-B39 73 Change in Accounts payable =B42-C42 74 Change in Unredeemed gift card liabilities =B43-C43 75 Change in Accrued compensation and related expenses =B44-044 76 Change in Accrued liabilities =B45-C45 77 Change in Accrued income taxes =B46-C46 78 Net cash from operating activities 79 Capital expenditures =C32-B32 80 Increase in Short-term investments =C27-B27 81 Net cash from investing activities 82 Dividends (1492 x 18.60%) =-B21 145 83 Payments of LT debt = (B48-C48)-37 84 Net cash from financing activities 85 Net change in cash 86 Beginning cash 07 Ending rach =SUM(B66:B77) =B79+B80 =B82+B83 =C78+C81+C84 =C26 -COLCOK