A recent annual report issued by Best Buy revealed the following data: The companys income statement reported
Question:
A recent annual report issued by Best Buy revealed the following data:
The company’s income statement reported total annual revenue of $45.0 billion and net income for the year of $1.0 billion.
Instructions
a. Evaluate Best Buy’s profitability by computing its net income percentage and its return on equity for the year.
b. Evaluate Best Buy’s liquidity by computing its working capital and its current ratio at the beginning of the year and at the end of the year.
c. Does Best Buy appear to be both profitable and liquid?Explain.
End of Year Beginning -. . $8.2 billion $7.3 billion . $4.6 billion $4.5 billion of Year Current assets .. .- .. Current liabilities Stockholders' equity
Step by Step Answer:
a Net income percentage Net IncomeTotal Revenue 10 billion450 billion 22 Return on equity Net Income...View the full answer
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
Related Video
The current ratio is a financial ratio that measures a company\'s ability to pay its short-term obligations with its short-term assets. It is calculated by dividing a company\'s current assets by its current liabilities. The formula for calculating the current ratio is: Current Ratio = Current Assets / Current Liabilities Current assets are assets that can be converted to cash within one year, while current liabilities are debts that are due within one year. A current ratio of 1:1 or greater is generally considered good, as it indicates that a company has enough current assets to cover its current liabilities. A current ratio of less than 1:1 may suggest that a company may have difficulty meeting its short-term obligations. It\'s important to note that the current ratio is just one of many financial ratios that can be used to assess a company\'s financial health. It should be used in conjunction with other financial ratios and qualitative factors to make informed decisions about investing or lending to a company.
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