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chapter_5-6.xlsx

P 5-1

	Best Buy Co., Inc.’s consolidated balance sheets from its 2011 annual report are presented in Exhibit 5-3.
		a. Using the balance sheets, prepare a vertical common-size analysis for 2011 and 2010. Use total assets as a base.
		b. Using the balance sheets, prepare a horizontal common-size analysis for 2011 and 2010. Use 2010 as the base.
		c. Comment on significant trends that appear in (a) and (b).

A partial balance sheet and income statement for King Corporation follow:
	KING CORPORATION
	Partial Balance Sheet
	December 31, 2011
	Assets
		Current Assets:
		Cash		33,493
		Marketable securities		215,147
		Trade receivables, less allowance of $6,000		255,000
		Inventories, LIFO		523,000
		Prepaid expenses		26,180
			Total current assets	1,052,820
	Liabilities
		Current liabilities:
		Trade accounts payable		103,689
		Notes payable (primarily to banks) and commercial paper		210,381
		Accrued expenses and other liabilities		120,602
		Income taxes payable		3,120
		Current maturities of long-term debt		22,050
			Total current liabilities	459,842
	KING CORPORATION
	Partial Balance Sheet
	December 31, 2011
		Net sales $3,050,600	3,050,600
		Miscellaneous income 45,060	45,060
			3,095,660
		Costs and expenses:
		Cost of sales $2,185,100	2,185,100
		Selling, general, and administrative expenses 350,265	350,265
		Interest expense 45,600	45,600
		Income taxes 300,000	300,000
			2,880,965
		Net income $ 214,695	214,695
		Note: The trade receivables at December 31, 2010, were $280,000, net of an allowance of $8,000, for a gross receivables figure of $288,000. The inventory at December 31, 2010, was $565,000.00
Compute the following:
a. Working capital
b. Current ratio
c. Acid-test ratio
d. Cash ratio
e. Days’ sales in receivables
f. Accounts receivable turnover in days
g. Days’ sales in inventory
h. Inventory turnover in days
i. Operating cycle