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Analysis of Best Buy’s Financial Statements of Year Ending February 2014

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Submitted By royee
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MEMORANDUM

To: James Harding
From:
Subject: Analysis of Best Buy’s financial statements of year ending February 2014
Date: 04/12/2015

Introduction: This memorandum is a clear and detailed analysis of Best Buy’s financial statements of year ending February 2014. I have analyzed the statements in the following perspectives: revenues and expenses, assets and liabilities, financial flexibilities, ownership structure, estimations and faithful representations. Considering overall conditions I have analyzed, I recommend to buy the stock of Best Buy for a long time and buy a 10 year long bonds.

Revenues and Expenses Analysis
Revenues
Best Buy Co., Inc., as a worldwide retailer specializing in selling technology products, generates its revenues mainly by accepting online orders and setting retail stores in many countries, including United States, Canada, China and Mexico (Merchandise and Services, 5). Best Buy also provides technological services in some areas, as another way to generate revenues (Description of Business, 4). Revenue is recognized from fixed sales price of merchandise and services, extended warranties, gift cards and credit financing (Revenue Recognition, 67). All of these mentioned resources lead to the total after-tax revenue, which is listed in its income statement. The income statement is comprised of three consecutive years revenue, making it easy to be compared by outsider investors. After analyzing the revenue, it is easy to find that the total revenue of fiscal year ended 2014, $42.41 billion, represents that the performance is only an average level of Best Buy (Segment and Geographic Information, 93). In addition, derivative instruments of Best Buy are taken into account because the company faces currency exchange problems as an international company. With the help of derivative instrument, the company has avoided exchange loss

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