In this chapter, we evaluated a home electronics giant, Best Buy. Tweeter Home Entertainment sold consumer electronics
Question:
In this chapter, we evaluated a home electronics giant, Best Buy. Tweeter Home Entertainment sold consumer electronics products from 154 stores on the East Coast under various names. It specialized in products with high-end features.
Tweeter fi led for bankruptcy in June 2007 and was acquired by another company in July 2007. Financial data for Tweeter, prior to its bankruptcy, are provided below.
INSTRUCTIONS Using the data provided, answer the following questions and discuss how these results might have provided an indication of Tweeter’s fi nancial troubles.
1.Calculate the current ratio for Tweeter for 2006 and 2005 and discuss its liquidity position.
2.Calculate the debt to assets ratio and free cash fl ow for Tweeter for 2006 and 2005 and discuss its solvency.
3.Calculate the earnings per share for Tweeter for 2006 and 2005, and discuss its change in profi tability.
4.Best Buy’s accounting year-end was February 28, 2006; Tweeter’s was September 30, 2006. How does this difference affect your ability to compare their profi tability?
Step by Step Answer:
Accounting Tools For Business Decision Making
ISBN: 9781119191674
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso