As customers shifted to shopping online, Best Buy's 1,100 giant stores, which enabled the company to obtain its position as the largest retailer of electronics, began to reduce its profitability and even threatening its survival. Many customers go to Best Buy stores to see items but then buy them for less from online retailers. As a result, Best Buy began to close stores and switch to smaller stores.

Suppose the following data were extracted from the annual reports of Best Buy. (All amounts are in millions.)

Instructions

Using the data above, answer the following questions.

a. How might the return on assets and asset turnover of Best Buy differ from an online retailer?

b. Compute the profit margin, asset turnover, and return on assets for 2025 and 2020.

c. Present the ratios calculated in part (b) in the equation format shown in Illustration 9.23.

d. Discuss the implications of the ratios calculated in parts (b) and (c).

Transcribed Image Text:

Total assets at year-end Net sales Net income 2025 $17,849 50,272 1,277 2024 $18,302 2020 $11,864 30,848 1,140 2019 $10,294