Best Buy Financial Analysis Essay

Submitted By ht34567
Words: 958
Pages: 4

Appendix:
Best Buy Financial Analysis




Fiscal 2015
Fiscal 2014
Fiscal 2013
Fiscal 2012
Fiscal 2011
Best Buy Financial Performance
31-Jan-15
1-Feb-14
2-Feb-13
3-Mar-12
26-Feb-11
Revenue
40,339.00
40,611.00
39,827.00
45,457.00
49,747.00
Net Income
1,233.00
532
-441
-1,231.00
1,277.00
EPS
3.57
2.34
0.99
3.97
3.75






Profitability
 
 
 
 
 
Gross Margin
22.43%
23.14%
23.35%
24.21%
25.23%
Operating Margin
3.59%
2.82%
-0.30%
4.84%
4.77%
Net Profit Margin
3.08%
1.73%
-1.18%
3.13%
2.87%
Financial Strength
 
 
 
 
 
Current Ratio
1.51
1.41
1.11
1.16
1.21
Total Debt/Equity
0.32
0.42
0.75
0.59
0.26
Management Effectiveness
 
 
 
 
 
Return on Assets
8.51%
4.51%
-2.85%
8.41%
8.59%
Return on Equity
27.69%
19.98%
-13.78%
27.47%
22.09%
Efficiency
 
 
 
 
 
Receivables Turnover
31.17
20.24
15.96
19.61
22.78
Inventory Turnover
5.93
5.23
4.96
5.93
6.54
Asset Turnover
2.76
2.64
2.43
2.69
2.75
Revenue (in $) per square foot
959.29
961.62
909.60
1041.16
1171.07

In spite of negative growth rate in the Electronics & Computer Stores Industry best buy have been able to maintain its revenues at 40.4 billion dollars for the fiscal year 2015 compared to 40.6 billion dollars in revenue for the fiscal year 2014. Fiscal 2015 included net earnings from continuing operations of $1233 million, compared to a profit of $532 million in fiscal 2014 a growth of 131 %. Earnings per share from continuing operations were $3.57 in fiscal 2015, compared to EPS of $2.34 in fiscal 2014, an increase of 52.5 %.
The increase in net margin for Best Buy was due to the improvement in the operating margin. Even though there was a decrease in gross margin of 0.60% in fiscal 2015 from fiscal 2014, operating margin increased by 0.77 % in the same period mainly due to reduction in operating cost. Net profit margin also increased to 3.08 % in fiscal 2015, an increase of 1.35 % from the fiscal year 2014. In fiscal 2015 Best buy has been able to increase its profitability by improving its operations.
Best Buy has also seen improvement in its financial strength in fiscal year 2015. Current Ratio which measures a company's ability to pay its short-term obligations improved to 1.51 in fiscal 2015 from 1.41 in fiscal 2014. The higher the current ratio, the more capable the company is of paying its obligations. Also Best Buys debt to equity ratio decreased from 0.42 in fiscal 2014 to 0.32 in fiscal 2105. Debt to Equity Ratio is a measure of a company's financial leverage. Lower leverage means good financial health for the company and less cost in interest per share holder of Best Buy.
Return of assets increased from 4.41 % in fiscal 2014 to 8.41 % in fiscal 2015 an increase of 4 %. Return on Fixed Assets measures the company's profitability to its fixed assets. The increase in return of assets shows that the management has improved its efficiency in utilizing its resources. Also, the return on equity increased from 19.98 % in fiscal 2014 to 27.69 % in fiscal 2015. Return on Equity measures the rate of return on the ownership interest (shareholders' equity) of the common stock owners. The increase in return on equity shows that the management at Best Buy has been able to increase the value of the shareholders of best buy.
Best Buy has improved its Operational efficiency in the fiscal year 2015. Receivable turns increased from 20.24 in fiscal 2104 to 31.17 in fiscal 2015. Increased receivables turn implies that Best Buy extension of credit and collection of accounts receivable is efficient. Increased collection of accounts receivables means there is less need for best buy to issue current debt to run daily operations. Also, both inventory and asset turnover have improved for best buy over the previous years but the improvement hasn’t been significant. The revenue per square feet of store area hasn’t improved in 2015. Though in fiscal 2014 the revenue per square feet improved because of Best Buy closing some non-profitable stores.
In fiscal 2015