BEST BUY ANNUAL REPORT

Best Buy has shown that their business is growing
each year. Their financial statements are healthy
and growing positively. Even though, the U.S.
economy is facing a downturn Best Buy is trying to
keep their revenues high. In my own opinion, they
will continue to grow because they have solid
financial statements that will help stabilize the
downturn of the U.S. economy.
Best Buy 2006 Annual Report Links:
PDF
HTML

Mr. Bradbury H. Anderson
Richfield, Minnesota, USA
Ending date of latest fiscal year: March 3, 2007
Best Buy specializes in selling consumer
electronics, home-office products,
entertainment software, appliances, and
related services
Main geographic area of activity is the United
States

Deloitte & Touche.
The company is healthy and growing. Their
financial statements are solid and they will
continue expanding their business amid the
U.S. economic situation.

Stock Price: 46.45
12 month range: 41.85 - 53.90
Dividend per share: 0.52 (1.10%)
February 07, 2008
Your opinion about the company stock as an
investment? BUY/HOLD

CEA: Consumer Electronics Association Website: http://www.ce.org

• Multistep format
• The increase in the three digits shows the expansion that
Best Buy is having. They reported gains as they continue
expanding their business. This demonstrates that the
consumer electronic industry is increasing. Therefore, more
stores have to be opened in order to increase their gains.
2006 2005
Gross Margin 8,769,000 7,726,000
Income from
operations
1,999,000 1,644,000
Net income 1,377,000 1,140,000

Assets Liabilities Stockholders
Equity
2005 11,864,000 6,607,000 5,257,000
2006 13,570,000 7,369,000 6,201,000
• In assets, cash and inventory increases helped assets to raise
their numbers at the end of the year. Helping assets to have
the largest change.
• The liabilities increase was primarily cause by an increase in
account payable and long term debt.
• The stockholders equity was raised because of the increase in
retained earnings.

•Cash flows for operations were more than net income in both
years, 2005 and 2006.
•The company is definitely growing through investing activities.
They have invested in new stores and inventory. However, the
major growing sector is retained revenues.
•The company’s primary source of financing are the long term
loans.
•Cash increased in the past two years.

• Revenue recognition: They recognize revenue when the sales
price is fixed or determinable, collectability is reasonably assured
and the customer takes possession of the merchandise, or in the
case of services, at the time the service is provided.
• Cash and cash equivalents: Cash primarily consists of cash on
hand and bank deposits. Cash equivalents primarily consist of
money market accounts and other highly liquid investments.
• Inventories: Merchandise inventories are recorded at the lower of
average cost or market. Inventory loss reserve represents
anticipated physical inventory losses that have occurred since the
last physical inventory date.
• Property and equipment: Property and equipment are recorded
at cost. They compute depreciation using the straight-line method
over the estimated useful lives of the assets.

Accounting Policies
Discontinued Operations
Acquisitions
Investments
Debt
Shareholders’ Equity
Net Interest Income
Leases
Benefit Plans
Income Taxes
Segment and Geographic Information
Contingencies and Commitments
Related Party Transactions
Condensed Consolidating Financial Information
Subsequent Event
Supplementary Financial Information (Unaudited)

Working Capital (in millions):
2006: 1,929 2005: 1,944
The Working Capital had a slight decreased in 2006
because of the increase in liabilities.
Current Ratio :
2006: 1.32 2005: 1.39
The Current Ratio decreased, suggesting that liabilities are
increasing.
Receivable turnover:
2006: 1.15 2005: 1.04
The Receivable turnover increased implying that the
company has less time is needed to collect accounts.

Average days’ sales uncollected:
2006: 5.99 2005: 4.99
This measures how many days it takes to collect the average
account receivables. In 2006, it increased 1 day.
Inventory turnover:
2006: 7.47 2005: 7.67
Measures how many times the company sold through its
inventory this year. Since it decreased this assesses that the
efficiency in the management inventory was better.
Average days’ inventory on hand:
2006: 48.86 2005: 47.59
Since it increased this indicates that sales slowed down.

Profit margin:
2006: 3.69% 2005: 3.59%
This shows that the firm increased the amount of dollars earned for every dollar
in revenues.
Asset turnover:
2006: 2.78 2005: 2.89
Since it decreased, it means that the company generated less net sales for each
dollar in assets used in business.
Return on assets:
2006: 10.29% 2005: 10.39%
Since there is a slight decrease, the company earned less income for every
dollar on assets.
Return on equity:
2006: 23.49% 2005: 25.00%
The profitability of the investment by the commons stockholders decreased.

Debt to equity:
2006: 1.15 2005: 1.11
This suggests that the company is controlled by the
creditors. There are more liabilities than
stockholder’s equity. Furthermore, the ratio
appears to be increasing meaning that or
liabilities are increasing or investors are taking out
their money.

For the past two years, calculate and comment
on:
Price/earnings per share:
2006: $2.33 2005: $1.91
There was a $0.39 increase in earning per
share; therefore, the stocks have strengthened.
Dividend yield:
2006: 0.8% 2005: 0.8%
Dividend yield remained unchanged.