Best Buy CEO’s Message to Shareholders -2016
Best Buy is in efforts to attract more investors by enhancing shareholder …show more content…
Beginning with the debt ratio, the trend has been stable and consistent with a deviation of only about 1% from 2011 to 2013.It only gets a slight increment in 2015.This increase in debt ratio can be attributed to acquisition of more resources or financials to support turnaround strategy which increased total liabilities. When you now compare Best Buy and Amazon, the debt ratio of Best Buy is slightly lower than that of yum brands implying that yum brands has more obligations in terms of liabilities.
In debt to equity ratio, we see a similar trend of stability with slight increase followed by a significant shift or increment of about 38% between 2014 and 2015.The decline can be due to decline in net income in the same period which affects the retained earnings. This can be attributable to the increased investments could have led to increase in liabilities relative to …show more content…
They therefore measure how efficient Best Buy and Amazon are in using its resources. The most common asset accounts are accounts receivable, inventory and total assets.Accounts receivable is the total amount of money due to a company for products or services sold on an open credit account. The accounts receivable turnover for Best Buy stood at 45.2% in 2015 compared to Amazon’s 54% .This shows how quickly Best Buy collects what is owed to it compared to Amazon and indicates the liquidity of the receivables.
For any company to be profitable, it must be able to manage its inventory, because it is money invested that does not earn a return until the product is sold. A higher inventory turnover ratio indicates more effective cash management and reduces the incidence of inventory obsolescence like the case in Best Buy. The best measure of inventory utilization is the inventory turnover ratio also referred to as inventory utilization