Annual Report Executive Summary

MBA 640
Instructor: Prof. Micheal Ulinski
Jialing Zhu(U00955164)
12/11/2012

Table of Content
Introduction ………………………………………………………………………………… 2
Investors Relations Website Evaluation …………………………………………………… 3
Evaluation of Contents of Annual Report ………………………………………………… 5
Financial Statement Analyses ……………………………………………………………… 6
Working Capital ………………………………………………………………………… 7
Current Ratio …………………………………………………………………………… 7
Current Cash Debt Coverage Ratio …………………………………………………… 8
Inventory Turnover Ratio ……………………………………………………………… 8
Days in Inventory ……………………………………………………………………… 9
Receivables Turnover Ratio …………………………………………………………… 9
Average Collection Period ……………………………………………………………… 9
Debt to Total
This ratio can be calculated by dividing total liabilities by total assets. Lower the percentage is, the better the company is capable in paying its long-term debts. Best Buy 's debt to total assets ratio of 62% is higher than RadioShack’s that of 57%. This means that Best Buy’s finance relies more on debt in their finance than RadioShack’s finance does. In other words, RadioShack is more capable in paying their long-term debts.
Cash Debt Coverage Ratio "This ratio indicates a company 's ability to repay its liabilities from cash generated from operations - that is, without having to liquidate productive assets such as property, plant, and equipment." (Kimmel 622) This can be calculated by dividing cash provided by operations by average total liabilities. Best Buy 's cash debt coverage ratio resulted as 0.20 times and RadioShack’s cash debt coverage resulted as 0.18 times. They are not very good ratio, however, they show that both companies are capable in paying its liabilities by the cash they earned from the operations only.
Times Interest Earned
This can be calculated by adding net income, interest expense, and tax expense, then divide the result by interest expense. This number shows how many times the corporation paid in the whole year. Best Buy resulted as 31 times, and RadioShack resulted as 10 times. This means that Best Buy is much more capable in paying the interests when they are due than RadioShack is.
Free Cash Flow Free cash flow shows the remaining cash that were made by the operation after paying for the capital expenditures and cash dividends. This can be calculated as subtracting capital expenditures and cash dividends from cash provided by operations. Best Buy resulted as 1,386 million dollars for the free cash flow, and RadioShack resulted as $133.5 million dollars. They are about 50 million dollars different, which can be considered as similar, but since Best Buy had much more cash provided by operations, it shows that Best Buy spent more cash on capital expenditure and cash dividends than RadioShack did.
Earnings per