GameStop (GME)
Best Buy (BBY)
I am comparing the two companies for my accounting class and need to answer these questions using the report down below.
1. Executive Summary (1 page): The final hand-in should start with an Executive Summary. This executive summary should be brief and serve as a summarization of the important findings and conclusions drawn.
2. Business Introduction (1 page): Brief introduction about the companys operation.
3. Business Analysis (2 pages)
4. Prepare forecasted financial statements over the next 6 years. (2 pages)
Business Introduction
GameStop Corp. Is a Fortune 500 company headquartered in Grapevine, Texas, it is a digital-first omni-channel retailer, offering games and entertainment products in its over 5,000 stores predominantly highly visible locations like strip malls and comprehensive e-Commerce properties across 10 countries. GameStop, through its family of brands, offers selections of new and used video gaming consoles, accessories, and video game titles, in both physical and digital formats.
GameStop also offers fans a wide variety vinyl figures, collectibles, board games and more. GameStops has a unique buy-sell-trade program, gamers can trade in video game consoles, games, and accessories, as well as consumer electronics for cash or in-store credit according to GameStops official website.
Best Buy Co., Best Buy is a retailing company that offers many different electronic products that vary from entertainment equipment to household goods, such as refrigerators and washing machines. When people think of Best Buy, they primarily think of consumer electronics which consists of televisions, computers, or accessories for either of those products (consumer electronics). Richard M. Schulze and James Wheeler founded Best Buy in 1966 under the original name Sound of Music Store in St. Paul, Minnesota Inc. The Company offers products and services to the customers visiting its stores, engaging with knowledgeable employees, Geek Squad agents, or using its websites and mobile applications. The company earns most of its revenue from brick-and-mortar store sales, but also has a presence in the e-commerce market. Best Buy operates internationally in Canada and Mexico, and formerly operated in China until February 2011 (when the faction was merged with Five Star). Its subsidiaries include Geek Squad, Magnolia Audio Video, and Pacific Sales. Best Buy also operates the Best Buy Mobile and Insignia brands in North America, plus Five Star in China. Best Buy sells cellular phones from Verizon Wireless, AT&T Mobility, Sprint Corporation in the United States. In Canada, carriers include Bell Mobility, Rogers Wireless, Telus Mobility, their fighter brands, and competing smaller carriers, such as SaskTel according to Best Buys website.
Business and Strategy Analysis
Economic and Current Environment: GameStop
Video games are a billion-dollar business and have been for many years. In 2019, the video game market in the United States was valued at 17.68 billion U.S. dollars. That same year U.S. consumers were said to spend roughly double the amount on gaming content, hardware, and accessories (YahooFinance,2018). What is important is that the first generation of gamers is now grown up with significant spending power. In the video game industry, the bargaining power of buyers can be high because it is made up of individual shoppers, children, students, and business customers who are all demanding different aspects and who want to buy the best product at the cheapest price. GameStop is trying to build a larger customer base which will reduce buyer power and should continue to innovate new products as these products can command top dollar and therefore eliminate or reduce the need to provide discounts. Any threat from a newcomer to the video game retail market comes from originality as new companies bring new ideas and new ways of doing things such as a lower pricing strategy or providing new value to customers. This may put pressure on GameStop. To confront this challenge GameStop will have to continue to provide new services and products. The company should continue to spend on research and development so that it maintains its leadership position in the market and as a result dissuades new entrants who are seeking extensive profits. The company can depend on its brand awareness and its knowledge of gaming. Substitute products (books, magazines, theater, non-computer games) is low, but there are providers of services such as Netflix that may be considered high if they offer a service that is different from current offerings. GameStop can react to this type of challenge by ascertaining the customers needs and by being service oriented.
Business and Strategy Analysis Game Stop inc.
Analysis will show that the retail gaming industry is an unattractive industry since the bargaining power of buyers and suppliers are high, barriers into the industry are low, and competitors are numerous. GameStop uses a broad differentiation strategy by offering a wide selection of new and used games and consoles. Its marketing strategy and reputation gives the firm a sustainable competitive advantage, but its research and development give the firm a competitive parity. The environment of the retail gaming industry possesses the threat of technological and sociocultural risks. GameStop can address these risks by merging with online social media sites and contracting with its suppliers to increase barrier for new entrants in the industry. GameStop’s multichannel strategy is to expand engagement, loyalty, and income, by offering products and services for the consumers. Their goal is to continue to execute what has been proven to work for them as their business and growth strategies. The core strategy is to continue to execute and include: Opening new stores in our domestic and international target markets and increasing their comparable store sales and operating earnings by capitalizing on industry growth and increasing sales of used video game products. The business strategy includes targeting a broad audience of game players. The idea is to focus on the electronic game enthusiast who demands the latest merchandise. They are also a stronger believer in enhancing the image of existing stores to provide a destination where game players can come and see the broad selection of products. GameStop competitive strength as a video retailer brand has been successful at separating its products and services. The company is known for to be an innovator in the computer game retail industry and is keeping up with the competition bringing changes in overall game industry through its business systems. According to George Sherman GameStop CEO points out that gaming is not a fad and will bring a proper turnaround that will expand properly into the online commerce space for computer, console, and mobile gaming and could easily have Netflix valuations within ten years. One of the key strengths that earns the organization an upper hand in the commercial center is GameStop’s buy, sell, and trade program. Through the program, the organization offers used games that are bought from clients at a markdown in return for store credit or cash. This program offers attractive incentive for clients by offering them an ease other option to buying new recreations while GameStop gets a significant benefit from exchanging games at a higher cost than they were bought from clients, in this way cutting any other supplementary cost. This key factor gives GameStop an upper hand in the computer game retail industry by enabling it to get higher benefits than its rivals who generally purchase inventory specifically from distributors.
Industry Analysis
The video game industry is sometime referred to as the interactive entertainment industry. It is the sector of the economy involved in the development, marketing, and sale of video games. It is made up of many job specialties and its various sections employ thousands of people worldwide. We will discuss the various components of the industry and the competition that exists within the various segments that comprise the market. The recent evolution in games have changed the way people view gaming. The 70s was the era for arcade games followed by the release of Atari Inc, first commercially successful game. The 80s was the high of the gaming industry with a revenue of $8 billion which surpassed annual revenues or pop music and Hollywood films together. During the 90s, there were some advancements to include the use of CDs to store and supply software and games and the invention of enhanced graphical games (Forbs,2019). The industry had steady growth, but it remained unpredictable in the 2000s and with the boom of mobile phones, games were quickly developed on iOS and Android platforms and emerged in the form of social media websites. With the evolution of video games from smart and sophisticated consoles to PC multi-player environments and mobile games, the gaming industry is flourishing with different platforms becoming easily accessible to customers. The advancement in gaming industry has made gaming for any and every consumer segment. The versatility of mobile gaming and enhancements in hardware and software, gaming is entertainment for all consumers from different establishments and backgrounds. This change in the industry and standards has furthermore increased in technological development and revenues in the industry.
Economic and Current Environment Best Buy
The current economic environment of Best Buy in these trying times are positive. Most shopping has occurred online. Retailers without a robust digital platform have experienced a free fall in revenue. Best Buy (BBY), Walmart (WMT) and Target (TGT) have bucked the trend. Last quarter, Best Buy beat earnings, up 4% Y/Y. The results were phenomenal, given that fact that several other retailers experienced a double-digit revenue decline. The threat of potential new entrants into the consumer electronics retail industry is relatively low. For Economies of Scale, the industry leaders have a clear advantage in comparison to small startups. The substantial amount of electronics sold through the top three retailers ($98.56 billion), means these companies purchase goods in bulk. Additionally, the large through put of products lowers storage/shipping costs, and ultimately, allows for lower product prices for consumers. With lower prices due to lower costs, products can lower price while keeping similar profit margins. Also, to note, the large throughput of products can allow for smaller profit margins due to the substantial amount of sales each company has annually. As an example, Best Buy has over 1,100 retail stores globally which also serve as distribution centers and storage facilities to lower overall costs for the company (Best buy co., Inc., 2018).
The suppliers for companies in the market have relatively high bargaining power mainly since there are only a few suppliers that the market demands from. Among the pool of suppliers include major manufacturers such as Sony, Samsung, LG, Panasonic Toshiba, and a few others. These suppliers provide the latest technology and companies like Best Buy must purchase from them to keep its inventory in stock to satisfy its consumers. This suggests that suppliers have a substantial influence on the products that they manufacture and their pricing. In 2018 Best Buy allied up with Amazon, the Economic variable is one that was carefully analyzed in Best Buys decision to ally with Amazon. Studying the economic trends and market tendencies provides firms such as Best Buy, to justify strategic business decisions more confidently. Unemployment, federal funds rate, GDP, S&P500, and e-Commerce sales are all economic elements that were factored in the decision of Best Buy partnering with Amazon. In relation to the Amazon and Best Buy partnership, both companies are leveraging the other companys distributive economies of scale (Bloomberg, 2018).
Industry Analysis
Best Buy is one of ten major companies that are traded publicly and sell predominately electronic products. Best Buys biggest competitors are Amazon, Wal-Mart, Apple computer stores, Dell, Hewlett packeted, CDW Corp., Lenovo, and GameStop. There are also numerous privately held retailers that serve specific niche markets. With a market capitalization of over $16 billion, Best Buy is the dominant player in this industry. Competition, however, comes from companies outside of this industry and international markets. Discount retailers such as Wal-Mart, Target, Amazon, occupy a significant part of the consumer electronics market. Wal-Mart, for example, booked $378 billion in sales in 2018 and its $92.2 million in gross profit more than double Best Buys revenue during the same period (Yahoo Finance, 2020). Best Buys CEO has seen a small increase in the companys quarterly growth, but to eliminate the losses the company must focus on new opportunities of growth. New opportunity led Best Buy to be partners with e-commerce giant Amazon. Best Buys new alliance with Amazon could allow Best Buy to fare better than most electronic retailers. The reason is Best Buys exclusive offering of its private brand of Insignia televisions and Amazons agreement to incorporate FireTV/Alexa features in them. These televisions are often preferred to other rivals because of their lower cost and FireTV software features. Consumers will now have the opportunity and incentive to buy a television for lower costs without the suffering on the technology. (Daphne,2018)
Strategies for Success: GameStop
GameStop faces serious challenges from the ever-changing video game industry. With a major industrial shift towards digital services, GameStops main product disc console games has had a sharp decline in demand. This, as well as an increase in competition and direct-to-consumer sales methods by large gaming companies, has caused GameStop to struggle in recent years. In fact, in 2019, GME stock plummeted from $16 in January to $4 in August, prompting an overhaul of GameStops executive team with the introduction of new CEO George Sherman and CFO James Bell (Gilbert, 2019b). CEO George Sherman began immediate steps to turning around GameStops plummet, introducing a new strategy called the GameStop Reboot Plan in efforts to reestablish GameStop as a leading name in the industry and increase shareholder value. According to Sherman, The GameStop Reboot plan is anchored on four pillars: (i) Optimize the Core Business, (ii) Become the Social / Cultural Hub for Gaming, (iii) Build a Frictionless Digital Ecosystem, and (iv) Transform Vendor Partnerships (Corporation, 2020).
After its introduction in September 2019, GameStops finances showed a marked improvement in low costs and reduced debt. In fact, the company Exited FY2019 with approximately $500 million in cash after generating $62.3 million in adjusted operating income, despite a challenging sales environment; significantly improved its capital structure, enabling the Company to reduce debt by $401 million and repurchase 38.1 million shares for $199 million using the proceeds from the sale of non-core business units; delivered a selling, general and administrative expense (SG&A) reduction of $130.4 million, on an adjusted basis, for FY2019; and optimized operations by improving inventory, enabling the Company to reduce inventory by 31% at FY2019 year-end and drive a 160 basis point gross margin expansion, as well as to reduce Accounts Payable and Other Liabilities by 64%, significantly enhancing GameStops working capital and overall balance sheet strength (Corporation, 2020).
Several key strategies were developed for the GameStop Reboot Plan. Shermans first mode of attack was to lower the companys selling, general, and administrative expenses. According to Business Insider, That means GameStop’s first addressable issue, in Sherman’s eyes, is lowering the cost of salaries, taxes, advertising, and other nonproduction costs (Gilbert, 2019a). Sherman accomplished this by laying off a significant number of employees and readjusting GameStops sales regions. While addressing operating costs in this manner, Sherman then turned his focus to the companys competitiveness. With the digitization of console games, GameStop is facing a dilemma not too unlike Blockbuster during the birth of Netflix. Consumers are now able to shop games from home directly off their consoles for less money. This has caused GameStop, who specializes in physical, disc copies of the latest games, to see a drop in demand for their products. To address this, GameStop had previously been running a buy-back program where the company would purchase old and used games from customers at low cost and sell them again at high prices. They rely heavily on this trade-in program as a means of product differentiation. According to their 10-K report, We provide our customers with an opportunity to trade in their used video game products in our stores in exchange for cash or in-store credit which can be applied towards the purchase of other products. We believe this process drives our higher market share, particularly at launch. We resell these used video game products, which allows us to be one of the only suppliers of previous generation platforms and related video games. We also operate refurbishment centers in the United States, Canada, Australia, and Europe, where defective video game products can be tested, repaired, relabeled, repackaged, and redistributed for resale back to our stores (10-K). Sherman looks to increase the effectiveness of this program by offering the used games to consumers at fairer pricing. As GameStop is one of the few modes of purchasing used games, this will hopefully increase their competitiveness by capitalizing on being able to offer games at a lower price than digital codes offer. Sherman is also seeking methods to expand GameStops product mix, testing out new products and services to offer: These tests are designed to focus on several elements, he said, including gaming, new and pre-owned, collectibles, immersive interactive experiences, and pop culture (Gilbert, 2019a). This updated product mix will also look for means for GameStop to enter the digital gaming frontier. If GameStop can successfully keep up with the changing industry, it will reemerge as a competitive name. The digital frontier remains a strategic goal in the companys 10-K report: The sale of video games delivered through digital channels and other forms of gaming continue to grow and take an increasing percentage of physical video game sales. We currently sell various types of products that relate to the digital category, including digitally downloadable content (DLC), full-game downloads, Xbox LIVE, PlayStation Plus and Nintendo network points cards, as well as prepaid digital and prepaid subscription cards. We have made significant investments in e-commerce and in-store and website functionality to enable our customers to access digital content to facilitate the digital sales and delivery process. We plan to continue to invest in these types of processes and channels to grow our digital sales base and enhance our market leadership position in the video game industry and in the digital aggregation and distribution category (10-K). Another major form of product expansion and differentiation is GameStops refurbishment program which extends past video games and applies to almost all electronics: The ability to receive the video games and consoles that a customer brings in for trade, repair them and return them to the consumer market is something no other retailer can do as well as GameStop. In addition, our largest state-of-the-art facility in Grapevine, Texas also has proprietary technology to refurbish the many different brands and operating platforms of smart phones and tablets (Innovation).
In the quest to expand product and service offerings, Sherman has entered GameStop into a multi-year partnership with Microsoft. This has provided an opportunity to offer customers more digital games and services, as well as enticing packages and bundles at lower prices. The partnership has widened the customer base for both companies and gives GameStop the means to improve in-store customer experience: As part of its transformation, GameStop plans to roll out Microsoft 365 and Microsoft Teams to its stores, empowering more than 30,000 store associates with enhanced productivity and collaboration tools. With Teams, store associates will more easily be able to ask questions and share insights with one another, enabling them to provide a better customer experience. Associates will also benefit from enhanced security and identify management capabilities (GameStop announces Multi-year strategic partnership with Microsoft).
A final, key strategy for GameStop is loyalty marketing. GameStop offers the PowerUp Rewards program to customers who sign up as a loyalty program that encourages repeat customers. According to GameStop, We operate loyalty programs in each of the countries in which we operate our stores. Our U.S. loyalty program, called PowerUp RewardsTM (“PowerUp Rewards”), had approximately 42.0 million members as of February 1, 2020, of which approximately 15.2 million members have purchased or traded at GameStop in the past year. The PowerUp Rewards membership totals include 5.0 million paying members. Our loyalty programs in our video game stores in the remaining countries had approximately 22.2 million members as of February 1, 2020. Our loyalty programs generally offer our customers the ability to sign up for a free or paid membership which gives our customers access to exclusive video game related rewards. The programs’ paid memberships generally include a subscription to Game Informer magazine and additional discounts on used merchandise in our stores. (10-K). GameStop claims that this program provides other strategic advantages as well: The innovation behind the PowerUp Rewards program is that it is much more than a loyalty or relationship program, it is a platform that enables GameStop to gain valuable insights, increase brand loyalty, acquire new customers, successfully launch new business initiatives, provide customers unique exclusive offers, and drive overall market share for GameStop (Innovation).
Strategies for Success: Best Buy
Contrastingly, Best Buy has been performing at a higher level than GameStop but has not escaped its own hardships. …in November 2012, the company faced two fundamental problems: negative comparable sales and declining operating income rate (Best Buy, 2017). Looking to address these shortfalls Best Buy turned towards expanding their product mix and method of sales. The company continues to push its offerings of the latest smart-home technologies by staying up to date with advancing products, selling more than just video games and consoles; they offer a wide variety of household electronics. In efforts to differentiate their products, Best Buy offers not only physical purchases, but services to support those products. The company runs Geek Squad, a service being updated to provide tech support for customers’ electronic products, regardless of where the product was originally bought. Best Buys In-Home Advisor program is also being updated to have a wider reach in Best Buys market. Since the implementation in 2012, Best Buy has been seeing marked improvements to support its strategies: Best Buy delivered $1.4 billion in cost savings over the last five years. And, as previously announced, it plans to drive an incremental $600 million in annualized cost savings by the end of fiscal 2021 (Best Buy, 2017). With annual revenue steadily increasing, by October 2020 Best Buy experienced a 21.39% increase in annual revenue year-over-year (Best buy revenue 2006-2020: BBY). This forward momentum and expansion into new products and services has kept Best Buy at the forefront of the tech sales industry as GameStop teeters on the brink of bankruptcy.
Profitability and Risk Analysis
There is evident information based on GameStops financial statements that the profitability level is undoubtedly low. However, the company showed a positive performance level in earlier years. In 2016, they had an EPS of 3.42, ROA of 9.7%, and a ROCE of 19.4%. In the last two years, 2019 and 2020, GameStop has started to decline and showed diminishing levels of profitability. In 2020, they reported an EPS of -5.38, ROA of -12.4%, and a ROCE of -48.3%. The decomposition indicates that a contributing factor is from the low profit margin and low asset turnover. The major indicators of the downward turning point in 2019 resulted from the operating profit and the income before tax. GameStops operating profit decline was strongly impacted from a decline in gross profit with a high amount of goodwill impairments. At the end of the quarter in 2018 GameStop had a strong decline in impairment charges to goodwill by a difference of 66 million. The goodwill is fundamentally the value of their company, therefore when this trend started to occur, there was not doubt that GameStop was plummeting.
When comparing GameStop with Best Buy, a company in the same industry, the profitability between the two did not compare. Best Buy is highly profitable with their most recent years performance illustrating an EPS of 5.82, ROA of 11.3%, and a ROCE of 45.4%. Best Buys profitability ratios have continued to rise, supporting that the company is good at turning investments into profits. Best Buy has a high asset turnover ratio which signifies that the company is efficient at using its assets to generate revenue. The high ROA is due to a strong operating profit that was influenced by a high gross profit from revenues and cost of goods sold. Best Buy has shown steady increasing trends within their financial statements, progressing each year.
Not only does GameStop portray low profits as a company, but they also show a high degree of risk. In most recent years, the companys liquidity was poor due to the operating cash flow to current liabilities. As this trend began to decrease in 2018, the major hurdle was in 2020 when they had a substantial decrease from 15.8% in 2019 to -24.2% in 2020. The solvency risk revealed that the interest coverage ratio was the major setback. In 2016 the ratio was 27.7, since then the most current financial statement appeared that in 2020 the ratio was -10.1. The most resent bond rating from Moodys declared GameStop a B3 rating which implies obligations considered speculative and subject to high credit risk.. Based on the Altman Z score in 2020 resulting in a 2.35 and the bankruptcy probability following with an 8.85%, the companys risk was evident.
Best Buys risk ratios established from the financial statements confirmed the company has low risk. The liquidity risk has a strong operating cash flow to liabilities with a 32.9% in 2020. As well as the solvency risk, showing a solid interest coverage ratio of 32.1. The common dividends per share have continued to increase each year which shows signs of long-term growth and healthy financial grounds. The Altman Z score in 2020 was 4.53 and the bankruptcy probability was .02%. Regarding the bond rating agencies, Moodys most recent bond ratings stated that Best Buy has a rating of A3 which indicates the company has moderately low risk, is in the upper-medium grade and the company shows financial strength. In comparison to GameStop, Best Buy has much lower risks which exemplifies the positive earnings and progression to grow.
2018 2019 2020
ROA 7.9% 11.7% 11.3%
Profit margin for ROA 2.5% 3.5% 3.7%
Asset turnover 3.1 3.3 3.1
Operating profit 4.4% 4.4% 4.6%
Income before tax 4.3% 4.4% 4.6%
ROCE 24% 42.3% 45.4%
Profit margin for ROCE 2.4% 3.4% 3.5%
Capital structure leverage 3.2 3.8 4.2
EPS 3.33 5.30 5.82
Ratio Analysis
2018 2019 2020
ROA 5.5% -16.5% -12.4%
Profit margin for ROA 3.2% -9.1% -6.6%
Asset turnover 1.7 1.8 1.9
Operating profit 5.1% -8.5% -6.2%
Income before tax 4.5% -9.1% -6.6%
ROCE 10.3% -44.8% -47.7%
Profit margin for ROCE 2.7% -9.6% -7.2%
Capital structure leverage 2.2 2.6 3.5
EPS 0.34 -6.59 -5.38
Best Buy GameStop
Common size Income Statement
2016 2017 2018 2019 2020
Revenues 100% 100% 100% 100% 100%
COGS -68.8% -65% -70.9% -72.1% -70.5%
Gross profit 31.2% 35% 29.1% 27.9% 29.5%
Operating profit 6.9% 6.5% 5.1% -8.5% 6.2%
Income before tax 6.7% 5.9% 4.5% -9.1% -6.6%
Net income 4.3% 4.1% 0.4% -8.1% -7.3%
Best Buy GameStop
2016 2017 2018 2019 2020
Revenues 100% 100% 100% 100% 100%
COGS -76.7% -76% -76.6% -76.8% -77%
Gross profit 23.3% 24% 23.4% 23.2% 23%
Operating profit 3.5% 4.7% 4.4% 4.4% 4.6%
Income before tax 3.3% 4.6% 4.3% 4.4% 4.6%
Net income 2.3% 3.1% 2.4% 3.4% 3.5%
Common size Balance Sheet
2016 2017 2018 2019 2020
Current assets 73.1% 75.9% 75.3% 68.8% 56.8%
Total assets 100% 100% 100% 100% 100%
Current liabilities 51.2% 51.4% 59.9% 58.2% 51.7%
Total liabilities 67.6% 66% 72.3% 74.4% 77.7%
Total equity 32.4% 34% 27.7% 25.6% 22.3%
Total liabilities& equity 100% 100% 100% 100% 100%
Best Buy GameStop
2016 2017 2018 2019 2020
Current assets 73.1% 75.9% 75.3% 68.8% 56.8%
Total assets 100% 100% 100% 100% 100%
Current liabilities 51.2% 51.4% 59.9% 58.2% 51.7%
Total liabilities 67.6% 66% 72.3% 74.4% 77.7%
Total equity 32.4% 34% 27.7% 25.6% 22.3%
Total liabilities& equity 100% 100% 100% 100% 100%
Risk Ratios
Best Buy GameStop
2018 2019 2020
Liquidity
Current ratio 1.26 1.18 1.10
Quick ratio 0.28 0.40 0.42
Operating cash flow to current liabilities 28.7% 31.4% 32.9%
Asset turnover
Inventory turnover 6.4 6.2 6.35
Accounts receivable turnover 35.2 41.5 40.3
Solvency
Total liabilities/total equity 261.3% 290.2% 348.1%
Interest coverage ratio 25.2 26.9 32.1
Bankruptcy predictors
Altman Z score 5.34 5.49 4.53
Bankruptcy probability 0% 0% 0.02%
Common dividends per share 136.2% 179.8% 198.9%
2018 2019 2020
Liquidity
Current ratio 1.56 1.43 1.32
Quick ratio 0.86 0.81 0.53
Operating cash flow to current liabilities 23.6% 15.8% -24.2%
Asset turnover
Inventory turnover 5.1 4.78 4.32
Accounts receivable turnover 47.5 60.7 46.8
Solvency
Total liabilities/total equity 127.7% 202.6% 361.1%
Interest coverage ratio 7.8 -12.3 -10.1
Bankruptcy predictors
Altman Z score 2.85 2.23 2.35
Bankruptcy probability 3.23% 10.88% 8.85%
Common dividends per share 153.1% 154.2% 46.3%
Accounting Quality
Best Buys annual 10-K was audited by Deloitte & Touche LLP. It was determined that the financial statements present fairly in all material respects. There was one critical audit matter, which was that Given the significance of vendor allowances to the financial statements and volume and diversity of the individual vendor agreements, auditing vendor allowances was complex and subjective due to the extent of effort required to evaluate whether the vendor allowances were recorded in accordance with the terms of the vendor agreements and that the allowances deferred as an offset to inventory were complete and accurate. GameStops annual 10-K was also audited by Deloitte & Touche LLP and it was determined that the financial statements present fairly in all material respects.
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