Interpreting Financial Results
Lisa Edwin
FIN/571
March 9, 2015
Arnold Harvey
Interpreting Financial Results Businesses in the United States creates financial documents in order to explore how each part of the company is doing and in return make changes to any department that’s not doing well financially. For instance if accounts payable is high compared to previous years then it will determine that the company isn’t paying their debts. The comparison shows the failure and the success of the company. It also helps with improvements as well. Best Buy is one the world’s largest company in home improvement. Best Buy is heavily traded on the stock market along with its competitors such as Amazon. The question is has Best Buy maintained financial throughout the years? Let’s take a look at the various ratios and compare the last three years. A ratio is the method of finding the value of a company by comparing the book value of a firm to its market value (Investopedia.com, 2014).
Market Value Ratios tells the equity of the business. The greater the ratio the greater the capital (Investopedia.com, 2014).
ROE = Net Income + Net Sales + Total Assets Net Sales Total Assets Total Equity
Profitability Ratios tells if the assets are good in a company. Through the last few years Best Buy has shown improvement.
Net Profit Margin = Net Income Net Sales
2012 2013 2014
1,277M = 0.03% (1,231M) = 0.02% (441M)