Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
Best Buy Co. Inc., solvency ratios
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
The solvency profile of the organization demonstrates a strategic shift in liability reporting and a significant strengthening of debt-servicing capabilities over the analyzed six-year period. While traditional debt levels remained stable or declined relative to assets, the integration of operating lease liabilities introduced a higher level of reported leverage starting in 2020.
- Debt and Equity Leverage
- The debt-to-equity ratio remained relatively stable, fluctuating between 0.29 and 0.42. However, a significant divergence is observed when operating lease liabilities are included; this ratio surged from 0.42 in 2019 to 1.17 in 2020, eventually reaching 1.30 by 2022. This indicates that a substantial portion of the company's long-term obligations is tied to lease commitments rather than traditional borrowed debt.
- Capital and Asset Ratios
- Debt to assets exhibited a gradual downward trend, decreasing from 0.10 in 2017 to 0.07 by 2022, suggesting a reduction in the reliance on debt to finance the asset base. Conversely, the debt to assets ratio including operating lease liabilities increased from 0.11 in 2019 to 0.22 in 2022. Similarly, the debt to capital ratio stayed within a narrow range of 0.22 to 0.30, while the lease-inclusive version nearly doubled from 0.30 in 2019 to 0.57 in 2022.
- Financial Leverage and Coverage
- Financial leverage showed a consistent upward trajectory, rising from 2.94 in 2017 to 5.80 in 2022, indicating an increased use of equity and liabilities to support operations. Despite this increase in leverage, the capacity to service obligations improved dramatically. The interest coverage ratio grew exponentially from 26.22 in 2017 to 122.12 in 2022, and the fixed charge coverage ratio rose steadily from 3.11 to 4.81 over the same period.
Overall, the analysis reveals a company with an exceptionally strong ability to meet its financial obligations. The marked increase in coverage ratios suggests that earnings growth has significantly outpaced the growth of interest and fixed charges, offsetting the impact of increased financial leverage and the capitalization of lease liabilities.
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Debt to Equity
Best Buy Co. Inc., debt to equity calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | —) | 110) | —) | —) | —) | —) | |
| Current portion of long-term debt | 13) | 14) | 14) | 56) | 544) | 44) | |
| Long-term debt, excluding current portion | 1,216) | 1,253) | 1,257) | 1,332) | 811) | 1,321) | |
| Total debt | 1,229) | 1,377) | 1,271) | 1,388) | 1,355) | 1,365) | |
| Total Best Buy Co., Inc. shareholders’ equity | 3,020) | 4,587) | 3,479) | 3,306) | 3,612) | 4,709) | |
| Solvency Ratio | |||||||
| Debt to equity1 | 0.41 | 0.30 | 0.37 | 0.42 | 0.38 | 0.29 | |
| Benchmarks | |||||||
| Debt to Equity, Competitors2 | |||||||
| Amazon.com Inc. | 0.59 | 0.54 | — | — | — | — | |
| Home Depot Inc. | — | 11.29 | — | — | — | — | |
| Lowe’s Cos. Inc. | — | 15.16 | — | — | — | — | |
| TJX Cos. Inc. | 0.56 | 1.04 | — | — | — | — | |
| Debt to Equity, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 1.06 | 0.93 | — | — | — | — | |
| Debt to Equity, Industry | |||||||
| Consumer Discretionary | 1.51 | 1.50 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Debt to equity = Total debt ÷ Total Best Buy Co., Inc. shareholders’ equity
= 1,229 ÷ 3,020 = 0.41
2 Click competitor name to see calculations.
The analysis of solvency ratios between 2017 and 2022 reveals a financial structure characterized by stable total debt levels and significant volatility in shareholders' equity, which serves as the primary driver for fluctuations in the debt-to-equity ratio.
- Total Debt Trends
- Total debt remained relatively constant over the six-year period, fluctuating within a narrow range between 1,229 million and 1,388 million US dollars. The highest debt level was recorded in February 2019, while the lowest point was reached in January 2022, indicating a consistent approach to long-term borrowing and debt maintenance.
- Shareholders' Equity Volatility
- Shareholders' equity exhibited substantial variance, starting at 4,709 million US dollars in 2017 and declining to 3,306 million US dollars by February 2019. A significant recovery occurred by January 2021, with equity rising to 4,587 million US dollars, before experiencing a sharp contraction to 3,020 million US dollars in January 2022.
- Debt to Equity Ratio Analysis
- The debt-to-equity ratio fluctuated in alignment with the volatility of the equity base. The ratio rose from 0.29 in 2017 to a peak of 0.42 in 2019. A subsequent downward trend brought the ratio to 0.30 by January 2021, followed by a sharp increase to 0.41 in January 2022. Despite these shifts, the ratio consistently remained below 0.50, suggesting a conservative solvency profile where equity maintains a dominant position relative to total debt.
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Debt to Equity (including Operating Lease Liability)
Best Buy Co. Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | —) | 110) | —) | —) | —) | —) | |
| Current portion of long-term debt | 13) | 14) | 14) | 56) | 544) | 44) | |
| Long-term debt, excluding current portion | 1,216) | 1,253) | 1,257) | 1,332) | 811) | 1,321) | |
| Total debt | 1,229) | 1,377) | 1,271) | 1,388) | 1,355) | 1,365) | |
| Current portion of operating lease liabilities | 648) | 693) | 660) | —) | —) | —) | |
| Long-term operating lease liabilities, excluding current portion | 2,061) | 2,012) | 2,138) | —) | —) | —) | |
| Total debt (including operating lease liability) | 3,938) | 4,082) | 4,069) | 1,388) | 1,355) | 1,365) | |
| Total Best Buy Co., Inc. shareholders’ equity | 3,020) | 4,587) | 3,479) | 3,306) | 3,612) | 4,709) | |
| Solvency Ratio | |||||||
| Debt to equity (including operating lease liability)1 | 1.30 | 0.89 | 1.17 | 0.42 | 0.38 | 0.29 | |
| Benchmarks | |||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | |||||||
| Amazon.com Inc. | 1.06 | 0.96 | — | — | — | — | |
| Home Depot Inc. | — | 13.16 | — | — | — | — | |
| Lowe’s Cos. Inc. | — | 18.24 | — | — | — | — | |
| TJX Cos. Inc. | 2.08 | 2.66 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | |||||||
| Consumer Discretionary Distribution & Retail | 1.67 | 1.46 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | |||||||
| Consumer Discretionary | 1.90 | 1.87 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Best Buy Co., Inc. shareholders’ equity
= 3,938 ÷ 3,020 = 1.30
2 Click competitor name to see calculations.
An analysis of the solvency position from 2017 to 2022 reveals a significant shift in the capital structure, transitioning from a conservative, equity-heavy position to a more leveraged profile. The most notable change occurred between 2019 and 2020, marking a fundamental pivot in the company's debt obligations.
- Total Debt Trends
- Between 2017 and 2019, total debt, including operating lease liabilities, remained stable, fluctuating minimally between 1,355 million and 1,388 million US dollars. However, a substantial increase is observed in 2020, where debt surged to 4,069 million US dollars, representing a nearly three-fold increase. This elevated level of indebtedness persisted through 2021 and 2022, ending the period at 3,938 million US dollars.
- Shareholders' Equity Volatility
- Shareholders' equity exhibited significant volatility over the six-year period. After a decline from 4,709 million US dollars in 2017 to 3,306 million US dollars in 2019, equity saw a temporary recovery, peaking at 4,587 million US dollars in 2021. This recovery was followed by a sharp contraction in 2022, with equity falling to 3,020 million US dollars, the lowest level within the analyzed timeframe.
- Debt to Equity Ratio Interpretation
- The debt to equity ratio reflects the combined impact of rising liabilities and fluctuating equity. The ratio remained low and stable from 2017 (0.29) to 2019 (0.42). In 2020, the ratio spiked to 1.17, indicating that total debt had surpassed total equity for the first time in the series. While the ratio improved to 0.89 in 2021 due to a rise in shareholders' equity, it reached a period high of 1.30 in 2022. This final increase is attributed to the simultaneous occurrence of sustained high debt levels and a significant reduction in equity.
The overall trajectory indicates an increased reliance on borrowed funds and lease obligations relative to equity financing. The shift from a ratio of 0.29 in 2017 to 1.30 in 2022 suggests a heightened solvency risk and a more aggressive financial leverage strategy compared to the initial period of analysis.
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Debt to Capital
Best Buy Co. Inc., debt to capital calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | —) | 110) | —) | —) | —) | —) | |
| Current portion of long-term debt | 13) | 14) | 14) | 56) | 544) | 44) | |
| Long-term debt, excluding current portion | 1,216) | 1,253) | 1,257) | 1,332) | 811) | 1,321) | |
| Total debt | 1,229) | 1,377) | 1,271) | 1,388) | 1,355) | 1,365) | |
| Total Best Buy Co., Inc. shareholders’ equity | 3,020) | 4,587) | 3,479) | 3,306) | 3,612) | 4,709) | |
| Total capital | 4,249) | 5,964) | 4,750) | 4,694) | 4,967) | 6,074) | |
| Solvency Ratio | |||||||
| Debt to capital1 | 0.29 | 0.23 | 0.27 | 0.30 | 0.27 | 0.22 | |
| Benchmarks | |||||||
| Debt to Capital, Competitors2 | |||||||
| Amazon.com Inc. | 0.37 | 0.35 | — | — | — | — | |
| Home Depot Inc. | 1.04 | 0.92 | — | — | — | — | |
| Lowe’s Cos. Inc. | 1.24 | 0.94 | — | — | — | — | |
| TJX Cos. Inc. | 0.36 | 0.51 | — | — | — | — | |
| Debt to Capital, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 0.51 | 0.48 | — | — | — | — | |
| Debt to Capital, Industry | |||||||
| Consumer Discretionary | 0.60 | 0.60 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= 1,229 ÷ 4,249 = 0.29
2 Click competitor name to see calculations.
The solvency profile between 2017 and 2022 exhibits a trend of relative stability in total debt obligations contrasted with significant volatility in the total capital base. This dynamic has resulted in a Debt to Capital ratio that fluctuates without a linear trajectory, reflecting changes in equity or other capital components rather than aggressive borrowing or rapid debt repayment.
- Total Debt Trends
- Total debt remained remarkably consistent over the six-year period, oscillating between a high of 1,388 million USD in 2019 and a low of 1,229 million USD in 2022. The absence of substantial spikes or drops suggests a disciplined approach to leverage management and a steady repayment schedule.
- Total Capital Volatility
- Total capital demonstrated significant instability, decreasing from 6,074 million USD in 2017 to 4,694 million USD by 2019. A notable recovery occurred by 2021, where capital reached 5,964 million USD, followed by a sharp contraction to 4,249 million USD in 2022. These movements indicate substantial shifts in the company's equity or other capital funding sources.
- Debt to Capital Ratio Analysis
- The Debt to Capital ratio increased from 0.22 in 2017 to a peak of 0.30 in 2019, primarily driven by the reduction in the total capital base. The ratio subsequently declined to 0.23 in 2021 as the capital base expanded. By 2022, the ratio rose again to 0.29; this increase was again attributed to a shrinking capital base, occurring even as total debt reached its lowest level in the observed period.
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Debt to Capital (including Operating Lease Liability)
Best Buy Co. Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | —) | 110) | —) | —) | —) | —) | |
| Current portion of long-term debt | 13) | 14) | 14) | 56) | 544) | 44) | |
| Long-term debt, excluding current portion | 1,216) | 1,253) | 1,257) | 1,332) | 811) | 1,321) | |
| Total debt | 1,229) | 1,377) | 1,271) | 1,388) | 1,355) | 1,365) | |
| Current portion of operating lease liabilities | 648) | 693) | 660) | —) | —) | —) | |
| Long-term operating lease liabilities, excluding current portion | 2,061) | 2,012) | 2,138) | —) | —) | —) | |
| Total debt (including operating lease liability) | 3,938) | 4,082) | 4,069) | 1,388) | 1,355) | 1,365) | |
| Total Best Buy Co., Inc. shareholders’ equity | 3,020) | 4,587) | 3,479) | 3,306) | 3,612) | 4,709) | |
| Total capital (including operating lease liability) | 6,958) | 8,669) | 7,548) | 4,694) | 4,967) | 6,074) | |
| Solvency Ratio | |||||||
| Debt to capital (including operating lease liability)1 | 0.57 | 0.47 | 0.54 | 0.30 | 0.27 | 0.22 | |
| Benchmarks | |||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | |||||||
| Amazon.com Inc. | 0.51 | 0.49 | — | — | — | — | |
| Home Depot Inc. | 1.04 | 0.93 | — | — | — | — | |
| Lowe’s Cos. Inc. | 1.20 | 0.95 | — | — | — | — | |
| TJX Cos. Inc. | 0.68 | 0.73 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | |||||||
| Consumer Discretionary Distribution & Retail | 0.63 | 0.59 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | |||||||
| Consumer Discretionary | 0.65 | 0.65 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 3,938 ÷ 6,958 = 0.57
2 Click competitor name to see calculations.
The solvency profile between January 2017 and January 2022 is characterized by a significant shift in capital structure, moving from a low-leverage position to a more debt-intensive composition. A fundamental transition occurred between 2019 and 2020, marking a substantial increase in the reliance on debt relative to total capital.
- Total Debt Evolution
- Debt levels remained relatively stable between 2017 and 2019, fluctuating narrowly around 1.36 billion US dollars. A sharp escalation was recorded in February 2020, where total debt, including operating lease liabilities, surged to 4.069 billion US dollars. This elevated level of indebtedness was maintained through 2021 and 2022, with a slight reduction to 3.938 billion US dollars by the end of the period.
- Total Capital Volatility
- The total capital base experienced a contraction from 2017 to 2019, declining from 6.074 billion US dollars to 4.694 billion US dollars. This downward trend reversed sharply in 2020 and 2021, reaching a peak of 8.669 billion US dollars, before decreasing again to 6.958 billion US dollars in 2022.
- Debt to Capital Ratio Analysis
- An overall upward trajectory is observed in the debt to capital ratio. From a starting point of 0.22 in 2017, the ratio rose steadily to 0.30 by 2019. The sudden increase in total debt in 2020 resulted in a significant leap to a ratio of 0.54. While a temporary moderation to 0.47 occurred in 2021—driven by an expansion in total capital—the ratio climbed to its period peak of 0.57 in 2022. This indicates that by January 2022, debt represented a significantly larger portion of the total capital structure than at the beginning of the analyzed timeframe.
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Debt to Assets
Best Buy Co. Inc., debt to assets calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | —) | 110) | —) | —) | —) | —) | |
| Current portion of long-term debt | 13) | 14) | 14) | 56) | 544) | 44) | |
| Long-term debt, excluding current portion | 1,216) | 1,253) | 1,257) | 1,332) | 811) | 1,321) | |
| Total debt | 1,229) | 1,377) | 1,271) | 1,388) | 1,355) | 1,365) | |
| Total assets | 17,504) | 19,067) | 15,591) | 12,901) | 13,049) | 13,856) | |
| Solvency Ratio | |||||||
| Debt to assets1 | 0.07 | 0.07 | 0.08 | 0.11 | 0.10 | 0.10 | |
| Benchmarks | |||||||
| Debt to Assets, Competitors2 | |||||||
| Amazon.com Inc. | 0.19 | 0.18 | — | — | — | — | |
| Home Depot Inc. | 0.56 | 0.53 | — | — | — | — | |
| Lowe’s Cos. Inc. | 0.55 | 0.47 | — | — | — | — | |
| TJX Cos. Inc. | 0.12 | 0.20 | — | — | — | — | |
| Debt to Assets, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 0.25 | 0.24 | — | — | — | — | |
| Debt to Assets, Industry | |||||||
| Consumer Discretionary | 0.35 | 0.36 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= 1,229 ÷ 17,504 = 0.07
2 Click competitor name to see calculations.
The analysis of solvency ratios indicates a strengthening financial position between fiscal years 2017 and 2022. The primary driver of this trend is a significant increase in the total asset base relative to a relatively stable level of total debt, resulting in a lower overall reliance on borrowed capital to fund assets.
- Total Debt Stability
- Total debt remained remarkably consistent throughout the period, fluctuating within a narrow range. Values moved from 1,365 million US dollars in January 2017 to a peak of 1,388 million US dollars in February 2019, eventually declining to 1,229 million US dollars by January 2022. This suggests a disciplined approach to debt accumulation and repayment.
- Total Asset Growth
- Total assets showed a dynamic trend, initially dipping from 13,856 million US dollars in 2017 to 12,901 million US dollars in 2019. This was followed by a period of rapid expansion, reaching a peak of 19,067 million US dollars in January 2021. Although assets decreased to 17,504 million US dollars in January 2022, the overall asset base grew significantly compared to the baseline in 2017.
- Debt to Assets Ratio Trend
- The debt to assets ratio reflects a downward trajectory, moving from 0.10 in 2017 to 0.07 in 2022. A slight increase to 0.11 was observed in February 2019, corresponding with the period of lowest asset valuation and peak debt. The subsequent decline to 0.07 indicates a reduction in financial leverage and an improved solvency profile, as a smaller proportion of the entity's total assets are financed through debt.
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Debt to Assets (including Operating Lease Liability)
Best Buy Co. Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | —) | 110) | —) | —) | —) | —) | |
| Current portion of long-term debt | 13) | 14) | 14) | 56) | 544) | 44) | |
| Long-term debt, excluding current portion | 1,216) | 1,253) | 1,257) | 1,332) | 811) | 1,321) | |
| Total debt | 1,229) | 1,377) | 1,271) | 1,388) | 1,355) | 1,365) | |
| Current portion of operating lease liabilities | 648) | 693) | 660) | —) | —) | —) | |
| Long-term operating lease liabilities, excluding current portion | 2,061) | 2,012) | 2,138) | —) | —) | —) | |
| Total debt (including operating lease liability) | 3,938) | 4,082) | 4,069) | 1,388) | 1,355) | 1,365) | |
| Total assets | 17,504) | 19,067) | 15,591) | 12,901) | 13,049) | 13,856) | |
| Solvency Ratio | |||||||
| Debt to assets (including operating lease liability)1 | 0.22 | 0.21 | 0.26 | 0.11 | 0.10 | 0.10 | |
| Benchmarks | |||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | |||||||
| Amazon.com Inc. | 0.33 | 0.31 | — | — | — | — | |
| Home Depot Inc. | 0.64 | 0.62 | — | — | — | — | |
| Lowe’s Cos. Inc. | 0.66 | 0.56 | — | — | — | — | |
| TJX Cos. Inc. | 0.44 | 0.50 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | |||||||
| Consumer Discretionary Distribution & Retail | 0.40 | 0.38 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | |||||||
| Consumer Discretionary | 0.44 | 0.44 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 3,938 ÷ 17,504 = 0.22
2 Click competitor name to see calculations.
The solvency profile of the organization exhibited a marked shift between 2017 and 2022, transitioning from a period of low leverage to a sustained higher debt-to-asset position beginning in 2020.
- Total Debt Trends
- Debt levels remained stable between January 2017 and February 2019, fluctuating minimally around the 1.3 billion dollar range. A significant increase occurred by February 2020, where total debt, including operating lease liabilities, rose to 4.069 billion dollars. This elevated level of indebtedness persisted through January 2022, ending at 3.938 billion dollars.
- Total Asset Fluctuations
- Total assets showed a slight decline from January 2017 to February 2019, moving from 13.856 billion dollars to 12.901 billion dollars. A substantial expansion of the asset base followed, peaking at 19.067 billion dollars in January 2021 before moderating to 17.504 billion dollars by January 2022.
- Debt to Assets Ratio Analysis
- The debt to assets ratio remained consistently low at approximately 0.10 to 0.11 for the first three years of the analyzed period. A sharp escalation to 0.26 was recorded in February 2020, coinciding with the surge in total debt. In the subsequent two years, the ratio stabilized between 0.21 and 0.22, reflecting a permanent upward shift in the company's leverage structure compared to the pre-2020 baseline.
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Financial Leverage
Best Buy Co. Inc., financial leverage calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Total assets | 17,504) | 19,067) | 15,591) | 12,901) | 13,049) | 13,856) | |
| Total Best Buy Co., Inc. shareholders’ equity | 3,020) | 4,587) | 3,479) | 3,306) | 3,612) | 4,709) | |
| Solvency Ratio | |||||||
| Financial leverage1 | 5.80 | 4.16 | 4.48 | 3.90 | 3.61 | 2.94 | |
| Benchmarks | |||||||
| Financial Leverage, Competitors2 | |||||||
| Amazon.com Inc. | 3.17 | 3.04 | — | — | — | — | |
| Home Depot Inc. | — | 21.39 | — | — | — | — | |
| Lowe’s Cos. Inc. | — | 32.52 | — | — | — | — | |
| TJX Cos. Inc. | 4.74 | 5.28 | — | — | — | — | |
| Financial Leverage, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 4.18 | 3.82 | — | — | — | — | |
| Financial Leverage, Industry | |||||||
| Consumer Discretionary | 4.32 | 4.22 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Financial leverage = Total assets ÷ Total Best Buy Co., Inc. shareholders’ equity
= 17,504 ÷ 3,020 = 5.80
2 Click competitor name to see calculations.
Between the fiscal years ending January 2017 and January 2022, there is a significant upward trajectory in financial leverage, indicating an increasing reliance on external financing relative to equity. The leverage ratio rose from 2.94 in 2017 to 5.80 in 2022, signaling a shift in the capital structure toward higher debt-to-equity proportions.
- Total Assets
- Asset levels remained relatively stable between 2017 and 2019, hovering around 13 billion. A period of expansion followed, with assets peaking at 19,067 million in 2021 before experiencing a moderate contraction to 17,504 million in 2022.
- Shareholders' Equity
- Equity demonstrated volatility over the period, starting at 4,709 million in 2017 and declining to 3,306 million by 2019. Despite a notable recovery to 4,587 million in 2021, equity dropped sharply to 3,020 million in 2022, the lowest level recorded in the analyzed timeframe.
- Financial Leverage Ratio
- The financial leverage ratio exhibited a consistent increase from 2017 through 2020, rising from 2.94 to 4.48. A brief stabilization occurred in 2021 with a slight dip to 4.16; however, the ratio accelerated sharply to 5.80 in 2022. This final spike is driven by the substantial reduction in shareholders' equity occurring alongside a relatively high asset base, which markedly increases the organization's financial risk profile.
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Interest Coverage
Best Buy Co. Inc., interest coverage calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net earnings | 2,454) | 1,798) | 1,541) | 1,464) | 1,000) | 1,228) | |
| Less: Gain from discontinued operations, net of tax | —) | —) | —) | —) | 1) | 21) | |
| Add: Income tax expense | 574) | 579) | 452) | 424) | 818) | 609) | |
| Add: Interest expense | 25) | 52) | 64) | 73) | 75) | 72) | |
| Earnings before interest and tax (EBIT) | 3,053) | 2,429) | 2,057) | 1,961) | 1,892) | 1,888) | |
| Solvency Ratio | |||||||
| Interest coverage1 | 122.12 | 46.71 | 32.14 | 26.86 | 25.23 | 26.22 | |
| Benchmarks | |||||||
| Interest Coverage, Competitors2 | |||||||
| Amazon.com Inc. | -1.51 | 22.09 | — | — | — | — | |
| Home Depot Inc. | 17.14 | 13.60 | — | — | — | — | |
| Lowe’s Cos. Inc. | 13.49 | 9.88 | — | — | — | — | |
| TJX Cos. Inc. | 37.80 | 1.46 | — | — | — | — | |
| Interest Coverage, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 7.64 | 15.91 | — | — | — | — | |
| Interest Coverage, Industry | |||||||
| Consumer Discretionary | 9.30 | 13.23 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Interest coverage = EBIT ÷ Interest expense
= 3,053 ÷ 25 = 122.12
2 Click competitor name to see calculations.
An analysis of solvency metrics indicates a substantial strengthening of the capacity to meet interest obligations over the six-year period ending January 29, 2022. The trend is characterized by a simultaneous increase in operating profitability and a significant reduction in financing costs, resulting in an exponential expansion of the interest coverage ratio.
- Earnings Before Interest and Tax (EBIT) Trends
- Operating performance demonstrated consistent growth, rising from 1,888 million US dollars in January 2017 to 3,053 million US dollars by January 2022. While growth remained steady between 2017 and 2020, a notable acceleration occurred in the final two years, with a significant increase in earnings observed in 2021 and 2022.
- Interest Expense Trends
- Interest costs remained relatively stable between 2017 and 2019, fluctuating between 72 million and 75 million US dollars. Starting in 2020, a downward trajectory emerged, with expenses falling to 64 million US dollars, then 52 million US dollars in 2021, and reaching a low of 25 million US dollars by January 2022. This represents a marked reduction in the total cost of debt servicing.
- Interest Coverage Ratio Analysis
- The interest coverage ratio, which measures the ability to pay interest on outstanding debt, experienced a dramatic increase. The ratio remained stable around 25x to 27x from 2017 through 2019, before climbing to 32.14 in 2020 and 46.71 in 2021. By January 2022, the ratio reached 122.12, indicating that operating profits were more than 122 times the size of interest expenses. This trajectory suggests a significant reduction in solvency risk and a highly favorable margin of safety for creditors.
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Fixed Charge Coverage
Best Buy Co. Inc., fixed charge coverage calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net earnings | 2,454) | 1,798) | 1,541) | 1,464) | 1,000) | 1,228) | |
| Less: Gain from discontinued operations, net of tax | —) | —) | —) | —) | 1) | 21) | |
| Add: Income tax expense | 574) | 579) | 452) | 424) | 818) | 609) | |
| Add: Interest expense | 25) | 52) | 64) | 73) | 75) | 72) | |
| Earnings before interest and tax (EBIT) | 3,053) | 2,429) | 2,057) | 1,961) | 1,892) | 1,888) | |
| Add: Operating lease cost | 770) | 777) | 780) | 783) | 798) | 790) | |
| Earnings before fixed charges and tax | 3,823) | 3,206) | 2,837) | 2,744) | 2,690) | 2,678) | |
| Interest expense | 25) | 52) | 64) | 73) | 75) | 72) | |
| Operating lease cost | 770) | 777) | 780) | 783) | 798) | 790) | |
| Fixed charges | 795) | 829) | 844) | 856) | 873) | 862) | |
| Solvency Ratio | |||||||
| Fixed charge coverage1 | 4.81 | 3.87 | 3.36 | 3.21 | 3.08 | 3.11 | |
| Benchmarks | |||||||
| Fixed Charge Coverage, Competitors2 | |||||||
| Amazon.com Inc. | 0.47 | 5.24 | — | — | — | — | |
| Home Depot Inc. | 9.94 | 8.97 | — | — | — | — | |
| Lowe’s Cos. Inc. | 8.02 | 6.05 | — | — | — | — | |
| TJX Cos. Inc. | 3.17 | 1.04 | — | — | — | — | |
| Fixed Charge Coverage, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 2.82 | 5.29 | — | — | — | — | |
| Fixed Charge Coverage, Industry | |||||||
| Consumer Discretionary | 3.65 | 5.60 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 2022 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 3,823 ÷ 795 = 4.81
2 Click competitor name to see calculations.
The solvency profile of the entity demonstrates a consistent strengthening trend over the six-year period ending January 29, 2022. This improvement is characterized by a widening gap between earnings and fixed obligations, thereby enhancing the margin of safety for the fulfillment of fixed financial commitments.
- Earnings Before Fixed Charges and Tax
- A steady increase in earnings is observed, rising from US$ 2,678 million in 2017 to US$ 3,823 million in 2022. The growth rate accelerated significantly after February 1, 2020, providing a more robust financial base to cover obligations.
- Fixed Charges
- Fixed obligations followed a downward trajectory after peaking at US$ 873 million in 2018. By January 29, 2022, these charges had decreased to US$ 795 million, indicating a reduction in the total fixed financial burden over the analyzed period.
- Fixed Charge Coverage Ratio
- The coverage ratio improved from 3.11 in 2017 to 4.81 in 2022. While the ratio remained relatively stable between 2017 and 2020, a sharp increase occurred in 2021 and 2022, reflecting a significantly enhanced capacity to service fixed charges from operational earnings.
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