Ratio and Cost   Analysis 

Ratio and Cost   Analysis

Instructions/Descriptions

Ratio Analysis and Cost Volume Profit Analysis Worksheet

bakery in Georgia. A friend has asked to partner with her in the business. In order to know if she wants to expand the business, Nicole wants to “run” some computations to better understand the existing business.

Budgeted data for the next 12 months includes:

Revenues $600,000

Fixed costs $150,000

Variable costs $425,000

Variable costs will change based on the number of products sold. Use an Excel spreadsheet to compute expected operating income for each of the following scenarios.

A 5% increase in contribution margin, but keeping revenues steady,

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A 5% decrease in fixed costs,

A 10% increase in units sold,

A 15% increase in units sold and a 5% increase in fixed cost, and

A 5% decrease in variable costs and a 5% decrease in fixed cost.

Ratio Analysis and Interpretation Worksheet

Use the following tables to complete the critical thinking assignment.

Best Buy Co., Inc.

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Income Statement

2/3/20181/28/20171/30/20161/31/2015RevenueTotal Revenue42,151,00039,403,00039,528,00040,339,000Cost of Revenue32,275,00029,963,00030,334,00031,292,000Gross Profit9,876,0009,440,0009,194,0009,047,000Operating Expenses Selling General and Administrative7,911,0007,493,0007,612,0007,550,000Operating Income or Loss1,965,0001,947,0001,582,0001,497,000Income from Continuing Operations Add Total Other Income/Expenses Net-148,000-131,000-272,000-110,000Interest Expense75,00072,00080,00090,000Income Before Tax1,742,0001,744,0001,230,0001,297,000Income Tax Expense818,000609,000503,000141,000Add Discontinued Operations1,00021,00090,000-13,000Net Income925,0001,156,000817,0001,143,000

Best Buy Co., Inc.

Balance Sheet

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2/3/20181/28/20171/30/20161/31/2015Current Assets Cash And Cash Equivalents1,101,0002,240,0001,976,0002,432,000Short Term Investments2,196,0001,848,0001,384,0001,539,000Net Receivables1,049,0001,347,0001,162,0001,280,000Inventory5,209,0004,864,0005,051,0005,174,000Other Current Assets274,000217,000313,0001,047,000Total Current Assets9,829,00010,516,0009,886,00011,472,000Long Term Investments013,00027,0003,000Property Plant and Equipment2,421,0002,293,0002,346,0002,295,000Goodwill425,000425,000425,000425,000Intangible Assets18,00018,00018,00057,000Other Assets356,000591,000817,000993,000Deferred Long Term Asset Charges159,000317,000510,000574,000Total Assets13,049,00013,856,00013,519,00015,245,000Current Liabilities Accounts Payable4,873,0004,984,0004,450,0005,030,000Short/Current Long Term Debt499,0000350,0000Other Current Liabilities1,043,000944,000975,0001,609,000Total Current Liabilities7,817,0007,122,0006,925,0007,777,000Long Term Debt648,0001,158,0001,168,0001,492,000Other Liabilities805,000704,000877,000901,000Total Liabilities9,437,0009,147,0009,141,00010,250,000Stockholders’ Equity Total Stockholder Equity3,612,0004,709,0004,378,0004,995,000

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Using the attached financial statements for Best Buy Co., Inc. complete the financial statement analysis and ratio analysis by answering the questions below.

1. Calculate average collection period, total asset turnover, inventory turnover, and days in inventory.
2. Assess the activity of the firm, using your calculations in part a, over the four-year period.
3. Calculate the gross profit margin, operating margin, and net profit margin.
4. Assess the profitability of the firm, using your calculations in part c, over the four-year period.
   

   Ratio Analysis and Cost Volume Profit Analysis Worksheet

   

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