Accounting project Assignment Example | Topics and Well Written Essays - 1250 words

Accounting Project of Best Buy Incorporated - Assignment Example The Annual Report of the company in 2009 is also examined to identify the potential issues and strengths of the company. This is carried out to examine the financial position and performance of Best Buy during the recent three years so that a decision can be made whether it will be profitable to include this company’s stocks in the investor portfolio. Though the profits have declined in the last two years, over 100 stores were opened by Best Buy worldwide in the years 2008 and 2009. The company now has a total of about 155,000 employees (full time, part time and seasonal). In 2008, Best Buy acquired 50 % stakes in Best Buy Europe, Napster and 75 % stakes in Five Star. This has increased the portfolio of Best Buy and indicates the international growth in terms of a number of stores, investments and product base. The objectives set out for the near future include growing the market share, providing digital solutions, attaining international growth and improving the effectiveness and efficiency of the operations. The net earnings have decreased by 29 % in 2009; however, the revenue has increased mainly due to the acquisition of Best Buy Europe. A reduction in customer traffic was recorded in 2009 when compared to 2008, mainly due to the global economic slowdown and reduction in consumer expenditure (Form10-K). The liquidity ratios compute the ability of the company to meet its liabilities with the assets at hand. They also indicate the effectiveness of the company in terms of debt collection and moving inventory to sales. The liquidity ratios for Best Buy are computed as shown below: The liquidity position of Best Buy has become very weak over the three years and the quick ratio is just 0.28 in 2009. The decrease in liquid assets can be attributed to the decreased customer traffic.