Question

Comparative income statements and balance sheets for Best Buy are shown below ($ millions).


Required:
a. Use the following ratios to prepare a projected income statement, balance sheet, and statement of cash flows for Year 3.
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 insales?


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  • CreatedJanuary 22, 2015
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