Beyond the Numbers

Beyond the Numbers (BTN) is a special problem section aimed to refine communication, conceptual, analysis, and research skills. It includes many activities helpful in developing an active learning environment.

BTN 1-1 Key financial figures for Best Buy’s fiscal year ended February 26, 2005, follow:

Required

What is the total amount of assets invested in Best Buy?
What is Best Buy’s return on assets? Its assets at February 28, 2004, equal $8,652 (in millions).
How much are total expenses for Best Buy in fiscal year 2005?
Does Best Buy’s return on assets seem satisfactory if competitors average a 3.2% return?

Fast Forward

Access Best Buy’s financial statements (Form 10-K) for fiscal years ending after February 26, 2005, from its Website (BestBuy.com) or from the SEC Website (www.sec.gov) and compute its return on assets for those fiscal years. Compare the February 26, 2005, fiscal year-end return on assets to any subsequent years’ returns you are able to compute, and interpret the results.

REPORTING IN ACTION
A1, A3, A4

Check (2) 10.4%

BTN 1-2 Key comparative figures ($ millions) for both Best Buy and Circuit City follow:

Required

What is the total amount of assets invested in (a) Best Buy and (b) Circuit City?
What is the return on assets for (a) Best Buy and (b) Circuit City? Best Buy’s beginning-year assets equal $8,652 (in millions) and Circuit City’s beginning-year assets equal $3,731 (in millions).
How much are expenses for (a) Best Buy and (b) Circuit City?
Is return on assets satisfactory for (a) Best Buy and (b) Circuit City? (Assume competitors average a 3.2% return.)
What can you conclude about Best Buy and Circuit City from these computations?

Comparative Analysis
A1, A3, A4

Check (2b) 1.6%

BTN 1-3 Craig Thorne works in a public accounting firm and hopes to eventually be a partner. The management of Allnet Company invites Thorne to prepare a bid to audit Allnet’s financial statements. In discussing the audit fee, Allnet’s management suggests a fee range in which the amount depends on the reported profit of Allnet. The higher its profit, the higher will be the audit fee paid to Thorne’s firm.

Required

Identify the parties potentially affected by this audit and the fee plan proposed.
What are the ethical factors in this situation? Explain.
Would you recommend that Thorne accept this audit fee arrangement? Why or why not?
Describe some ethical considerations guiding your recommendation.

ETHICS CHALLENGE
C4, C5

BTN 1-4 Refer to this chapter’s opening feature about LoveSac. Assume that Shawn Nelson desires to expand his manufacturing facilities to meet customer demand. Shawn and his partners decide they need to meet with his banker to discuss a loan to allow them to expand.

Required

Prepare a half-page report outlining the information you would request from Shawn if you were the loan officer.
Indicate whether the information you request and your loan decision are affected by the form of business organization for the LoveSac store.

COMMUNICATING IN PRACTICE
A1, C2

BTN 1-5 Visit the EDGAR database at (www.sec.gov). Access the Form 10-K report of World Wrestling Entertainment (ticker WWE) filed on July 13, 2004, covering its 2004 fiscal year.

Required

Item 7 of the 10-K report provides comparative financial highlights of WWE for the years 2000–2004. How would you describe the revenue trend for WWE over this five-year period?
Has WWE been profitable (see net income) over this five-year period? Support your answer.

TAKING IT TO THE NET
A3

BTN 1-6 Teamwork is important in today’s business world. Successful teams schedule convenient meetings, maintain regular communications, and cooperate with and support their members. This assignment aims to establish support/learning teams, initiate discussions, and set meeting times.

Required

Form teams and open a team discussion to determine a regular time and place for your team to meet between each scheduled class meeting. Notify your instructor via a memorandum or e-mail message as to when and where your team will hold regularly scheduled meetings.
Develop a list of telephone numbers and/or e-mail addresses of your teammates.

TEAMWORK IN ACTION
C1

Book’s Website provides free and easy access to all articles for every

BTN 1-7 BusinessWeek publishes a ranking of the top 1,000 companies based on several performance measures. This issue is called the BusinessWeek Global 1000. Obtain the July 25, 2004, publication of this issue—this book’s Website maintains free access to this article.

Required

What are the top 10 companies on the basis of market value?
Are any of the top 10 companies in the same industry? If yes, identify them.
How many of the top 10 based on market capitalization are not U.S. companies? List them.

BusinessWeek Activity
C1

BTN 1-8 Refer to this chapter’s opening feature about LoveSac. Assume that Shawn Nelson decides to open a new manufacturing facility to meet customer demand. This new company will be called LoveSac Manufacturing Co.

Required

LoveSac Manufacturing obtains a $500,000 loan and Shawn contributes $250,000 of his own assets in exchange for common stock in the new company.
1. What is the new company’s total amount of liabilities plus equity?
2. What is the new company’s total amount of assets?
If the new company earns $80,000 in net income in the first year of operation, compute its return on asset (assume average assets equal $750,000). Assess its performance if competitors average a 10% return.

ENTREPRENEURIAL DECISION
A1, A2

Check (2) 10.7%

BTN 1-9 You are to interview a local business owner. (This can be a friend or relative.) Opening lines of communication with members of the business community can provide personal benefits of business networking. If you do not know the owner, you should call ahead to introduce yourself and explain your position as a student and your assignment requirements. You should request a thirty minute appointment for a face-to-face or phone interview to discuss the form of organization and operations of the business. Be prepared to make a good impression.

Required

Identify and describe the main operating activities and the form of organization for this business.
Determine and explain why the owner(s) chose this particular form of organization.
Identify any special advantages and/or disadvantages the owner(s) experiences in operating with this form of business organization.

HITTING THE ROAD
C2

BTN 1-10 Dixons Group plc (Dixons-Group.com) is the leading European retailer of consumer electronics and competes with both Best Buy and Circuit City. Key financial figures for Dixons Group plc follow:

Required

Identify any concerns you have in comparing Dixons’ income and revenue figures to those of Best Buy and Circuit City (in BTN 1-2) for purposes of making business decisions.
Identify any concerns you have in comparing Dixons’ return on assets ratio to those of Best Buy and Circuit City (computed for BTN 1-2) for purposes of making business decisions.

GLOBAL DECISION
A1, A3, A4

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Home > Chapter 1 > Beyond the Numbers

	Course-wide Content
		Study Guide Sample Cha... Working Papers Sample ... Appendices Student ALEKS Mobile Resources Net Tutor Video Library

	News, Articles & Links
		Text Company Links
	Quizzes
		Multiple Choice True or False
	More Resources
		Key Terms Review Chapter Glossary PowerPoint Presentations Excel Template Assignm... Business Week Articles More Taking it to the ... Problem Set C Topic Tackler Narrated Slides Video Segments iPod Content
	eBook
		Chapter Opener Importance of Accounting Fundamentals of Accoun... Transaction Analysis a... Financial Statements Demonstration Problem Appendix 1A Return and... Appendix 1B Business A... Summary Guidance Answers to De... Guidance Answers to Qu... Key Terms Multiple Choice Quiz Discussion Questions Quick Study Exercises Problem Set A Problem Set B Problem Set C Serial Problem Beyond the Numbers Answers to Multiple Ch...

	Instructor Resources
		Text Updates Instructor ALEKS MH Homework Manager CPS by eInstruction CYGL Problem Solutions Peachtree Solution Files Excel Template Solutions

	Course-wide Content
		Study Guide Sample Cha... Working Papers Sample ... Appendices Student ALEKS Mobile Resources Net Tutor Video Library

	Instructor Resources
		Instructor Resource Ma... Solutions Manual Solutions to Excel Problem Set C Solutions More Taking it to the ...
	News, Articles & Links
		Text Company Links
	Quizzes
		Multiple Choice True or False
	More Resources
		Key Terms Review Chapter Glossary PowerPoint Presentations Excel Template Assignm... Business Week Articles More Taking it to the ... Problem Set C Topic Tackler Narrated Slides Video Segments iPod Content
	eBook
		Chapter Opener Importance of Accounting Fundamentals of Accoun... Transaction Analysis a... Financial Statements Demonstration Problem Appendix 1A Return and... Appendix 1B Business A... Summary Guidance Answers to De... Guidance Answers to Qu... Key Terms Multiple Choice Quiz Discussion Questions Quick Study Exercises Problem Set A Problem Set B Problem Set C Serial Problem Beyond the Numbers Answers to Multiple Ch...