Best Buy Company Inc. Research Analysis
Shannon A. Ebert
Retail Management- MRKT 480
Professor Chris Ward
10 October 2014
1 Table of Contents
I. Background ………………………………………………………………………………3
II. Mission Statement…………………………………………………………………………3
III. Current Chief Executive Officer (CEO) and History……………………………………3
IV. Michael Porter’s Five Forces Model……………………………………………………..…4-5
V. Strengths, Weaknesses, Opportunities, and Threats (S.W.O.T. analysis) ………...…...……5-6
VI. Strategy for Rate of Expansion………………………………………………………………..6
VII. Store Demographics…………………………………………………………………….……7
VIII. Sustainability……………………………………………………………….…………..……7
IX. Recent News…………………………………………………………………..………….…7-8
X. Target Market…………………………………………………………………..………………8
XI. Company Life Cycle…………………………………………………………………..………8
XII. Pricing Policies and Product Offerings………………………………………………………8
XIII. Competition, Marketing Strategies, and Business Strategies………………………….……9
XIV. Social Media Marketing……………………………………………………..………………9
XV. Stock Pricing…………………………………………………………………..……………10
XVI. Financial Ratios……………………………………………………………………...…10-11
XVII. Financial Ratio Analysis…………………………………………………………………..11
XVIII. Cash Flow
Analysis…………………………………………………………………………….……...…12-14
XIX. Appendix (Financial Statements, Calculations, Works Cited)………………………….…15
2 I. Background
Richard M. Schulze founded Sound of Music in 1966, and sold high quality stereos. During this
first year the company was able to buy out two of its competitors and reach profits of over
50,000 dollars. By 1969, the company became a part of the NASDAQ exchange. In 1983, Sound
of Music was revolutionized and renamed Best Buy Company Incorporated. This organization is
multichannel in the technology retail industry, operating both domestically and internationally.
They offer a variety of technology products such as computers, phones, tablets, appliances, and
televisions. Along with their products, Best Buy also provides services such as technical support,
repairs, and installations. Some of their segmented brands include Best Buy Mobile, Five Star,
Future Shop, Geek Squad, Magnolia Audio Video, and Pacific Sales. Today, Best Buy has
successfully developed a recognizable, substantial brand that continues to be a powerhouse in the
retail industry.
II. Mission Statement
The mission statement for Best Buy Inc. reads, "Our formula is simple: we’re a growth company
focused on better solving the unmet needs of our customers—and we rely on our employees to
solve those puzzles. Thanks for stopping.” One short phrase may be small in length, but large in
its value. This vision statement communicates to investors, employees, and customers the strong
beliefs and goals that this firm strives for. Utilizing strengths of employees, developing
relationships with customers, and exceeding expectations with investors are just some of the
other goals associated with the company’s mission statements. Another important slogan that
Best Buy uses reads, “People. Technology. And the pursuit of happiness.” This message is
geared more internally, toward employees and management. It serves as the corporate vision,
allowing the company to communicate and implement a common goal from within. In order to
implement these statements, Best Buy works to have happy customers, shareholders, investors,
and community.
III. Current Chief Executive Officer (CEO) and History
Best Buy’s previous CEO, Brian Dunn, stepped down from office in April, causing confliction
internally and externally throughout the company. Fortunately, Best Buy was proud to hire
Hubert Joly, known as “Mr. Fix It,” in early September of 2012, and he remains in office today.
He has impressive credentials and years of professional experience to contribute to the
enhancement of the company. Originally, Joly grew up in France where he graduated from HEC
Paris with a Business Administration degree, and then he pursued his Public Administration
degree from Institut d’Etudes Politiques de Paris. Previously, Hubert Joly worked for Mckinsey
(14 years), became president of EDS in France in 1996, and then became CEO of Vivendi
Universal Games. Right before Best Buy, he worked for a hospitality company known as
Carlson, based in Minnesota, where he held the CEO position. These credentials support is
personal and professional success. Today, Best Buy has continued to improve since being under
the head management of Hubert Joly.
3 IV. Michael Porter’s Five Forces Model
The Michael E. Porter Model helps one to determine the strengths and weaknesses of any
industry. This method narrows down different areas of the economy to help discover which ones
are attractive and profitable, and also defines a company’s corporate strategy. Competition in the
industry, potential of new entrants into industry, power of suppliers, power of customers, and
threat of substitute products are all factors this model analyzes.
Competition
HIGH
Online Retailers
Digital Content
Distributors
Specialized
Stores
Big Box General
Retail Stores
Ex: Amazon,
Walmart, eBay,
Costco, Radio
Shack, Game
Stop, Target
Potential of
New Entrants
into Industry
Low
Power of
Suppliers
Power of
Customers
Threat of
Substitutes
High
Low
Low
New companies
must have financial
resources.
Greatly influence
price
Competitive Pricing
Searching Tools
Carry Highest Quality
Products
Great influence
product offerings.
Online Shopping
Loyal Customers
Provide Price Match
Guarantee
Well-established
Quality Brand
Top 20 Retailers make
up 60% or Profits
Trusted by
Customers
Develops & Regulates
Customer Base
Sufficiently
Differentiated
Ex: Apple, Sony,
Panasonic, Dell, and
Toshiba
Buy in Small
Quantities
Rely on Repeat
Purchases
Price Match
Guarantee
Work to Keep up with
buying trends (digital
downloads, online
services)
Provide Quality
Products and
SERVICES compared
to others
Best Buy’s direct competitors include Amazon, Walmart, eBay, Radio Shack, Game Stop,
Target, and Costco. These are all retail companies that supply similar products to Best Buy.
Some stores such as Walmart, Target, and Costco offer a variety of different products aside from
electronics. Amazon and eBay are major e-commerce retailers, while Game Stop specializes in
just video games, and Radio Shack focuses on small electronics. Best Buy has an advantage,
because they are the largest big box store that specializes in the sale of electronics, and they also
offer the greatest assortment. Compared to the other retailers, this tough, highly innovative
industry can be just as difficult to enter as any other industry. On average, a big box electronic
retailer will spend 15 million dollars as an initial investment to open a store. Since technology is
rapidly changing, new markets are opening up when one least expects it, so in theory, there are
not many barriers to enter and exit the market besides the financial component. The advantage
Best Buy has is that it is one of the few physical stores that provide such a large variety of
products. They rely heavily on suppliers such as Apple, Sony, Panasonic, Dell, and Toshiba. The
top 20 suppliers make up about 60% of Best Buy’s merchandise. In order to provide top of the
line products, the company must be on good terms with their suppliers, otherwise Best Buy could
lose customer base. Suppliers do “call the shots” regarding price and product offerings. They
provide Best Buy with the top of the line products, and all Best Buy has to do is make the
purchase. This is one way to ensure that quality is taken care of, because the product liability is
on the supplier. Along with supplier influence, comes the bargaining power of customers as well.
4 In recent years, online shopping has influenced customer purchasing power significantly. About
81% of customers research product prices online among competitors, especially for electronics,
before making their purchase. Customers do not have a strong bargaining power, because most
buy in small quantities. Also, Best Buy promises the best price and a price match guarantee. The
final component of this analysis looks at the threat of substitutes. With this, Best Buy must deal
with electronic/e-commerce retailers, digital content distributors, and other big box general
retailers. Electronic/e-commerce retailers provide a convenient shopping experience, offering
consumers a large variety of products, a low price, and home delivery. Digital content
distributors such as Netflix, Xbox, and iTunes offer a unique way for customers to purchase their
products. Lastly, big box retailers offer a vast diversity of products from food to apparel to
electronics. These do not create a major threat regarding substituting products, but substituting
brand names. People may chose to buy the same products at one of Best Buy’s competitors,
because that competitor might satisfy the consumers particular shopping needs.
V. Strengths, Weaknesses, Opportunities, and Threats (S.W.O.T. analysis)
Strengths of Best Buy include the size, quality services, product offerings, inventory
management, niche marketing, and reputation development. They have done an outstanding job
developing brand recognition, especially with their large domestic and global distribution
channels. Their brand name itself makes it easy to increase profit margins. Unique services, such
as the Geek Squad and providing installations, have contributed to their differentiation from
other retail electronic stores. Separate services such as these give them opportunity for
specialized stores under their brand name (basically another way to make money.) Along with
this, Best Buy has continued to perform excellent services that exceed customer expectations.
This is what they are known for. Another strength is inventory management, because this
company is able locate niche markets at various locations, and they always have products on
their shelves that customers demand. This contributes to a stable increase in sales overall. All
these strengths lead to the development of Best Buy’s positive and notable reputation.
Weaknesses are present in any company. For Best Buy, they struggle with senior leadership
turnover, weakening finances, global expansion, competition, new technology and innovation,
and too many brands. Top management for the company has changed more rapidly than ideal.
Chief Executive Officer (CEO) Brian Dunn, stepped down in April, and then Hubert Joly
replaced him. Issues in authority and leadership caused problems with the infrastructure of the
company. Although Best Buy appears to be successful, on paper they are struggling financially.
Strategic marketing and planning in international markets has continued to be an area Best Buy
lacks in. Domestic purchases make up a major portion of their sales, but they are sacrificing this
ratio so that they can continue to compete globally. Continuing to increase profits domestically is
the only aspect that is keeping the company afloat in foreign markets. Competition continues to
increase as new technology and innovative products are developed. E-commerce retailing has
transformed the industry, and as Amazon’s sales continue to grow, Best Buy’s continue to
decrease. In regards to brands, the company focuses too heavily on niche marketing, creating
affordable products, and needs to bring attention to the market they could take advantage of for
higher end items.
5 Opportunities arise in the mist of these strengths and weaknesses. Changes in economic and
lifestyle trends in today’s society are key areas Best Buy could take advantage of. Some of these
trends include emerging global markets, growth of mobile technology, increased need for IT
support, and the increase in online shopping. The world is “becoming smaller,” as more trade
barriers come tumbling down, allowing companies to join global markets. Best Buy has already
jumped the gun on this opportunity, but potential markets arise everywhere, every day, all over
the world. The growth of mobile technology and smart phones has allowed communication to be
performed instantaneously, at a greater convenience, and more efficiently. An increasing need
for IT support is also present today, because as technology continues to advance it becomes more
difficult for the “average Joe” to conduct repairs alone. One of this company’s major competitors
is Amazon, but Best Buy is not just competing with them as a company, but the entire online
shopping industry. Amazon has become a competitor with all major retail stores, but if Best Buy
can create their own advantage and efficient process to online shopping for their store, it could
create success for them.
Threats are the final area of this analysis, in which it seems Best Buy has had many in recent
years. Some topics include shareholder lawsuits, limited suppliers, wholesalers becoming
competitors, online retailers taking over market, and other competitors entering the markets.
They have experienced lawsuits with their shareholders, causing bad publicity for the company.
This has affected the price of their stock. Also, Best Buy has limited suppliers and sources to
obtain inventory at a consistent price. Since there is a high bargaining power of suppliers, they
must be in constant negotiation with them, since they “call the shots” in regards to product price
and product offering. Some suppliers are even becoming wholesalers such as Apple. This takes
away business and sales from Best Buy. As online retailing continues to grow, the threat of this
taking over the industry is high. Rumors have even leaked that Amazon has debated buying Best
Buy out. As with any other industry, there is always the threat of new competitors entering the
market. This is often difficult to predict. Overall, this S.W.O.T. paints a sufficient image of the
strengths, weaknesses, opportunities, and threats for the company so they can strategically plan
and prepare for the future.
VI. Strategy for Rate of Expansion
Best Buy plans to continue to grow in global markets. Most of their revenues are obtained
domestically, and foreign markets are very expensive to transition into. In order to expand
globally, they must raise capital and focus their growth here in the U.S. Traditionally, Best Buy
has been known to provide cutting edge consumer electronics. When their largest competitor,
Circuit City, went out of business, Best Buy obtained leverage of the market. They plan to take
advantage of opportunities in cloud computing, virtual sales, and affiliate marketing. Since Best
Buy has already developed a highly recognizable brand and infrastructure, they plan to utilize
this advantage, and continue to push for growth. The goal is to increase sales to small and
medium size businesses and to increase the sale of their goods and service through e-commerce,
so that they can be offered worldwide. When more capital is obtained domestically, Best Buy
will continue to channel more funds to grow business on an international scale to countries such
as Canada, Mexico, and China.
6 VII. Store Demographics
Most Best Buy stores are located in suburban areas in shopping outlet strips. Locations are free
and stand-alone, as one can depict from their storefront design, and they are a destination store.
A unique component of their distribution is the availability of products in Kiosks such as in
airports. In plain terms, this is basically a Best Buy vending machine for consumers to
conveniently purchase products. This mechanism creates a higher elasticity for the price of these
products at this location, because the demand will be higher, and there is a higher chance of an
impulse purchase decision. Most stores are full-sized retail stores, but there are also specific
stores that segment their brand such as Best Buy Mobile. This brand focuses specifically on
mobile phones. Best Buy Mobile stores are mostly located in malls. In terms of size and number,
in 2013 Best Buy had 1,990 stores operating with a total square footage of 55,785,000, making
the average size 28,032 square feet.
VIII. Sustainability
“Going Green” is a strong initiative for society to be more aware of the environment and their
footprint they leave behind. Best Buy has taken strong initiatives to become more sustainable.
Their goal can be divided into a couple different areas: grow our green business, recycling
efforts, carbon footprint reduction, and innovative green solutions. Energy Star is a part of their
appliance and electronic product line, which allows them to use less energy to operate. Also,
items are packaged in non-toxic materials. For recycling efforts, stores recycle internally and
provide end of life solutions for one’s old electronics. Leed and green building standards and
efficient lighting in stores is part of carbon footprint reduction. Finally, Best Buy ensures a
diverse network of contributors and new green customer solutions. Becoming eco-friendly is
becoming a more important part of the company’s brand. As an electronic company, consumers
are setting expectations for Best Buy to be very social responsible, which includes following the
major trend of worldwide sustainability and conservation efforts.
IX. Recent News
“Best Buy Thinks Television is the Future of its Business.” September 29, 2014.
Best Buy believes that its new televisions will be a hit in the next few years. They are
working with Samsung and Sony to show case new televisions that are said to have a
display four times better than high definition.
“The iPhone 6 is a Gift for Best Buy.” September 22, 2014.
History has shown that the release if a new iPhone creates a sufficient boost, anywhere
from 2%-2.5%, to mobile revenue.
“Should Amazon Acquire Best Buy or Radio Shack?” September 15, 2014.
Amazon reports having about 8 billion dollars in cash. This arises a controversial
decision, as Amazon debates the pros and cons of buying Best Buy or Radio Shack.
7 “Best Buy Sees Revenue Shrink as Shoppers Shift Online.” August 26, 2014.
Amazon has continued to rapidly increase profits while Best Buy’s are falling. Today,
they have to not only compete with Amazon, but the entire e-commerce industry to stay
afloat.
X. Target Market
Best Buy’s target market consists of small sized businesses, medium sized businesses, software
companies, game developers, and small music and movie producers. In regarding people and
demographics, their market has more recently targeted wealthy suburban families, trendy urban
residents, and close-knit families of Middle Americans. Best Buy customers do not tend to buy a
large quantity of products. Most buy a small quantity, in which they purchase a high quality
product at a low cost. This means that the company relies heavily on repeat buyers.
XI. Company Life Cycle
The company appears to be entering the end of its life cycle. With sales moving online, they are
having a hard time competing with the e-commerce industry. Even with strong strategic
differentiation efforts and quality perception of products/services, Best Buy is still struggling. In
today’s society, the norm of purchasing electronics is moving from physical full-service stores
like Best Buy to e-commerce. They are stuck with high overhead costs, expensive employee
training, and too much space for inventory, unlike their competitor, Amazon. There have been
rumors that Amazon is considering the possibility of buying Best Buy. Even a rumor such as this
indicates that this company is nearing the end of its life cycle.
XII. Pricing Policies and Product Offerings
Best Buy Inc. is a company that focuses on selling electronics. Their main departments include
consumer electronics, computing and mobile devices, entertainment, appliances, services, and
other. Each of these makes up a certain percentage of the total revenue. Consumer electronics
make up 20%, computing and mobile phones 55%, entertainment 5%, appliances 10%, services
9%, and other <1%. Best Buy relies on increasing the gross margin on products that are sold in
their major departments (consumer electronics and computing/mobile phones), which helps
contribute to profit maximization. This is their pricing strategy.
Other pricing policies include their promise to match competitors and any price on the market for
the same product. Price matching is a growing trend continuing to reshape the retail industry.
Due to the massive increase in instantaneous multimedia communication, such as mobile
applications, finding the lowest price is essential to consumers. This created highly competitive
prices. Best Buy is said to be in a constant “price war” with Walmart. Some of their service
components that set them apart include their popular Geek Squad brand, installations, and free
“haul away.” Best Buy also offers special product services and replacement plans. These are all
advantages the company relies on to keep themselves differentiated in today’s market.
8 XIII. Competition, Marketing Strategies, and Business Strategies
Competition for Best Buy has been significantly increasing in recent years. In the past,
competition was not as fierce, especially with the closing of competitors such as Circuit City and
CompUSA. Today, the growth of online consumer shopping has created competition in all
industries. With a rise in price matching and trade-in programs, Best Buy has been forced to step
up their game. Best Buy is a physical store and requires a heavy investment in inventory,
overhead, property, and employees to operate, where as major competitors such as Amazon and
eBay are fully online retailers that are changing the industry, and they do not require these
investments.
In order to make up for the changing industry, Best Buy uses specific marketing and business
strategies. In order to compete, their strategy must change from differentiation to specifically a
focused differentiation. They can achieve this by limiting the variety of their products. Instead of
carrying a large variety, Best Buy will chose to carry leading consumer electronics, and not
products that are saturated in the market. In each of the departments previously discussed, they
will simply carry the most current product in each department, which takes advantage of public
interest and allows for greater expertise. Their new strategy will create an alternation in internal
systems, location, sales (transition to online shopping), and customer services.
XIV. Social Media Marketing
Social Media continues to grow in popularity as an inexpensive, yet effective marketing tool.
Brad Smith is the Director of Interactive Marketing & Emerging Media of the company. He
manages all the social media marketing. He believes that when using social media, Best Buy
must focus on making the customer the priority and providing communication. Brad aims to
engage and influence customers. Their Social Media Marketing Mission Statement reads: “To
connect customers and employees with the Best Buy brand and each other through the right
tools, platforms, and collaboration delivered when, where and how they want.” The channels
Best Buy utilizes are their community forum, Best Buy IdeaX, Facebook Fan page, and Twitter
page. Brad Smith understands that people are bombarded with marketing messages every day
that they tend to tune them out. Customers simply do not listen to marketers and advertisers
today. Best Buy has guidelines with their social media that include making it social, being
authentic, keeping it simple, easily accessible, about the people, and transparent.
9 XV. Stock Pricing
XVI. Financial Ratios
SIC Code: 5731
Quick Ratio
Upper Quartile
2.4
Solvency
Middle
1.1
Lower Quartile
0.4
Best Buy
0.5
Current Ratio
3.4
2.0
1.2
1.47
Current
Liabilities to Net
Worth
Current
Liabilities to
Inventory
Total Liabilities
to Net Worth
Fixed Assets to
22.6
47.5
117.4
156
62.7
130.5
218.4
131
24.5
71.4
147.2
156
10.8
21.3
58.6
57
10 Net Worth
Collection Period
Sales to
Inventory
Assets to Sales
Sales to Net
Working Capital
Accounts
Payable to Sales
Return on Sales
Return on Assets
Return on Net
Worth
Upper Quartile
7.7
19
Efficiency
Middle
23.7
9.4
Lower Quartile
42.7
5.6
Best Buy
0.96
1.31
22.5
13.8
36.9
7.3
53.1
4.1
30.18
.14
3.3
5.6
8.8
10.74
Lower Quartile
0.3
0.8
2.2
Best Buy
100.4
3.3
10.5
Upper Quartile
5
15.5
29.9
Profitability
Middle
2.2
4.6
9.7
XVII. Financial Ratio Analysis
Financial ratios paint a picture of how a company is doing and can be compared to other
companies in their industry. The ratios for Best Buy are listed above. In the solvency section,
ratios are evaluated to determine how well the company can “pay its debts.” The quick ratio,
current ratio, and fixed assets to net worth fall between the lower and middle quartile. Current
liabilities to net worth and total liabilities to net worth both fall below the lower quartile, while
current liabilities to inventory falls in the upper quartile. These numbers indicate the Best Buy
has more liabilities than assets and does a poor job paying off their debts compared to other
companies in their industry. In the efficiency section, it indicates the company’s ability to
achieve maximum productivity with minimal waste. Best Buy’s collection period falls above the
upper quartile, while the assets to sales ratio falls in the upper quartile. Sales to inventory, sales
to net working capital, and accounts payable to sales all fall below the lower quartile. These
ratios indicate that Best Buy does a below average job being efficient in their operations. The
final section is profitability, which shows the businesses ability to obtain a financial gain. Return
on sales falls above the upper quartile, return on net worth falls in the upper quartile, and return
on assets is close to the middle quartile. These ratios indicate that the company does on decent
job turning over profits compared to other companies in their industry. Overall, most of Best
Buy’s financial ratios fall in the lower quartiles, supporting the previous statement that the
company is reaching the end of its life cycle.
XVIII. Cash Flow Analysis
11 SCF- Question 1
Is the SCF dated in the title for a period of time similar to the income statement or for a
point in time similar to the balance sheet? Why?
The cash flow statement is dated similar to the income statement (both show may of 2013
and May of 2014) while the balance sheet is different (shows May 2014, February 2014,
and May 2013.) The cash flow statement is dated similar to the income statement, because
both of these statements provide the necessary information to form the balance sheet (cash
amount and net income.)
SCF- Question 2
Identify the following sections of the SCF and record the amounts. Check the math by
summing to the cash balance at the end of year. Verify that the ending cash balance
reported on the SCF is the same as reported on the balance sheet.
Section
Net operating cash flows
Net investing cash flows
Net financing cash flows
Net increase (decrease) in cash flows
Cash balance at beginning of year
Cash balance at end of year
Does the total match balance sheet
cash?
Current
Year
308
-362
-53
-109
2678
-5
-116
-641
-755
1826
2569
1071
Yes/No
Prior Year
Second Prior Year
Yes/No
SCF- Question 3
12 Record net sales, net income and net operating cash flows below. All three should be
trending in approximately the same direction. If so, this is a sign of well-run business. If
one or more are going in a different direction, or random, then you must keep an eye
open for an explanation why.
Item
Current Year
Prior Year
Net Sales
461
-73
Net Income
463
-111
Net Operating Cash
Flows
308
-5
Second Prior Year
Explain why net sales, net income and net operating cash flows are trending together or
differently. (Hint: Look at depreciation expense and substantial changes in inventory,
accounts receivable and accounts payable balances. Explaining why is a key learning
point.)
Net operating cash flows occur internally. If net operating income is going well, it will
allow for an increase in net income overall and an increase in sales. If cash flow is not
operating well internally, neither will net sales or net income.
SCF- Question 4
Identify the primary cash outflows and inflows from investing activities.
Description of Activity
Cash outflow: Purchase of Investments
Cash inflow: Sales of Investments
Amount
-496
224
Consider three key issues at this point. Is the company adding assets? This is a sign of
growth. Is the company replacing assets? This is a sign of growth and stability. Is the
company only selling assets? This is a sign of retrenchment.
Best Buy has bought over 496 million dollars worth of investment and has sold 224
millions dollars worth. This indicates that the company is purchasing more assets than it
is selling, which means that they are expanding/growing.
13 SCF- Question 5
Identify the primary cash inflow and outflow from financing activities.
Description of Activity
Amount
Cash inflow: Issuance of Common Stock
9
Cash outflow: (Note: cash dividends paid are reported here.)
Repayment of Debt
-59
Consider two key issues at this point. How is the company being financed, through debt
or equity? Can you determine which is growing faster and why? A sound corporate
strategy is to finance a company with debt during stable times, because this demands
regular payment of principal and interest, and to finance a company with equity during
unstable times, because leadership can elect to pay or not pay dividends.
Best Buy has a negative cash flow of -59 and a cash inflow of 9. Since there outflow is
drastically less than the inflow and it is negative, the company is being financed by debt.
Also, since the ratio is so unbalanced, this indicates that cash outflow is growing faster
since the economy is becoming more stable.
From this cash flow statement, one can see that Best Buy’s ending cash flow does match the
amount on the balance sheet. Their cash flow and income statement are both released together,
before the balance sheet. Net sales, net income and net operating cash flows are trending
together. Best Buy’s purchase of investments exceeds their sale of investments, meaning that
they are expanding. Finally, the company uses debt financing to operate.
14 XIX. Appendix
Financial Ratios
Current Ratio
Total Current Assets ÷ Total Current Liabilities
10,118 / 6880 = 1.47
Quick (Acid Test) Ratio
(Cash + Net Receivables) ÷ Total Current Liabilities
(2569=871) / 6880 = 0.5
Current Liabilities to Net Worth
Total Current Liabilities ÷ Net Worth
6880 / 4421 = 1.56
Current Liabilities to Inventory
Total Current Liabilities ÷ Inventory
6880 / 5255 = 1.31
Total Liabilities to Net Worth
Total Liabilities ÷ Net Worth
6880 / 4421 = 1.56
Fixed Assets to Net Worth
Fixed Assets ÷ Net Worth
2525 / 4421 = 0.57
Collection Period
(Net Receivables ÷ Net Sales) * 365
(871 / 9035) * 365 = 0.096
Sales to Inventory
Net Sales ÷ Inventory
9035 / 6880 = 1.31
Assets to Sales
Total Assets ÷ Net Sales
13911 / 461 = 30.18
Sales to Net Working Capital
Net Sales ÷ (Current Assets - Current Liabilities)
461 / (10118 – 6880) = 0.14
Accounts Payable to Sales
Accounts Payable ÷ Net Sales
4952 / 461 = 10.74
Return on Sales (Profit Margin)
Net Profit ÷ Net Sales
463 / 461 = 1.004
Return
on Assets
Net Profit ÷ Total Assets
463 / 13911 = 0.033
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