Best Buy Co. Inc (BBY)
Solvency ratios
| Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.08 | 0.07 | 0.07 | 0.07 | 0.08 |
| Debt-to-capital ratio | 0.27 | 0.29 | 0.29 | 0.21 | 0.27 |
| Debt-to-equity ratio | 0.38 | 0.42 | 0.40 | 0.27 | 0.36 |
| Financial leverage ratio | 4.90 | 5.65 | 5.80 | 4.16 | 4.48 |
The solvency ratios of Best Buy Co. Inc indicate its ability to meet its financial obligations over the long term.
The debt-to-assets ratio has been relatively stable over the past five years, ranging from 0.07 to 0.08. This suggests that, on average, only around 7-8% of Best Buy's assets are financed by debt. A lower ratio indicates lower financial risk as the company relies less on debt to finance its operations.
The debt-to-capital ratio measures the proportion of debt in the company's capital structure. Best Buy's ratio has fluctuated between 0.21 to 0.29 over the past five years, indicating that debt accounted for around 21-29% of the company's total capital. A lower ratio signifies less reliance on debt for funding, which can be seen as a positive signal for solvency.
The debt-to-equity ratio has also shown some variability, ranging from 0.27 to 0.42. This ratio reflects the proportion of financing that comes from debt relative to equity. Best Buy's decreasing trend in this ratio over the years indicates a decreasing reliance on debt financing and a strengthening equity position, which could enhance the company's financial stability.
The financial leverage ratio has fluctuated notably, ranging from 4.16 to 5.80. This ratio shows the extent to which the company's assets are financed by debt. A lower ratio implies a lower level of financial risk, as the company has less reliance on debt to support its operations.
In summary, based on the solvency ratios analysis, Best Buy Co. Inc appears to have maintained a relatively stable and conservative debt structure. The decreasing trend in debt-to-equity ratio and the fluctuating financial leverage ratio suggest a positive direction in strengthening the company's solvency position over the years.
Coverage ratios
| Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 32.19 | 52.11 | 122.12 | 46.71 | 32.14 |
The interest coverage ratio for Best Buy Co. Inc has shown variability over the past five fiscal years. In fiscal 2024, the interest coverage ratio was 32.19, indicating that the company earned over 32 times the amount needed to cover its interest expenses. This was a decrease compared to the previous fiscal year, where the ratio was 52.11. Despite the decrease, the interest coverage ratio in fiscal 2024 remained at a healthy level.
Looking back, in fiscal 2023, Best Buy's interest coverage ratio was notably higher at 122.12, reflecting a strong ability to meet its interest obligations. The ratio dropped to 46.71 in fiscal 2021 but then increased again to 32.14 in fiscal 2020. Overall, the company has demonstrated varying levels of ability to cover its interest expenses over the years, with fiscal 2023 standing out as a particularly strong performance.
It is important for investors and stakeholders to monitor Best Buy's interest coverage ratio over time to assess the company's financial health and its ability to manage debt obligations.