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The company selected for the analysis is Best Buy Co., Inc. It is a multinational company that is based in the US. The company deals with the sale of consumer electronics and other related merchandise (Best Buy Co. Inc., 2017).
Filing Dates and Fiscal Year-End
The fiscal year for Best Buy Co., Inc. ends on January 28. The company filled form 10-K (annual report) on March 3, 2017, while form 8-K (current report) was filed on March 1, 2017. Finally, form 10-Q (quarterly report) was filed on December 02, 2016 (United States Securities and Exchange Commission, 2017a).
The current ratio as of January 28, 2017, was 1.5. This was a growth from 1.4 that was reported in the financial year 2016. This ratio shows the ability of the company to settle immediate obligations using current assets. The growth was caused by an increase in short-term investments and cash and a decrease in the current portion of long-term debt. The return on assets grew from 6.64% in the financial year 2016 to 8.86% in 2017. The ratio indicates the amount of revenue generated per unit of total assets. Finally, return on equity grew from 20.49% in 2016 to 26.08% in 2017 (United States Securities and Exchange Commission, 2017b). This ratio indicates the number of earnings generated from the capital contributed by shareholders (Wahlen, Baginski & Bradshaw, 2014).
Gross Profit Margin
The gross profit margin grew slightly from 23.25% in the financial year 2016 to 23.96% in 2017. This was a 0.7% increase. The slight increase in the value of the ratio is mainly attributed to a decline in the cost of goods sold (Horner, 2013).
The value of long-term debt dropped from $1,339 million in 2016 to $1,321 million in 2017. The decrease is equivalent to 1.34%. Further, the current portion of long-term debt also decreased from $395 million in 2016 to $44 million in 2017, a decrease of 88.86%. The change resulted from the repayment of 2016 Notes using cash. The balance of merchandise inventory dropped from $5,051 million in 2016 to $4,864 million in 2017, a decrease of 3.7%. This change can be attributed to a decline in the cost of sales and write-offs (Carey, Knowles & Towers-Clark, 2014). A further review shows that the cash dividend that was declared and paid in 2017 was $1.57 per share. This was up from $1.43 per share in 2016.
The analysis above and a closer review of the financial performance show that the revenue and profit of the company are dwindling. Therefore, it may not be advisable to buy or sell the stock at the moment. However, a current investor can hold on to the stock and monitor the performance further for about 2 to 5 years.
Best Buy Co. Inc. (2017). Financial information. Web.
Carey, M., Knowles, C., & Towers-Clark, J. (2014). Accounting: A smart approach. New York, NY: Oxford University Press.
Horner, D. (2013). Accounting for non-accountants. New Delhi, India: Kogan Page Ltd.
United States Securities and Exchange Commission. (2017a). Annual report – best buy co., inc. Web.
United States Securities and Exchange Commission. (2017a). Company filings – best buy co., inc. Web.
Wahlen, J. M., Baginski, S. P., & Bradshaw, M. (2014). Financial reporting, financial statement analysis, and valuation: A strategic perspective. Boston, MA: South-Western Cengage Learning.