Best Buy Co. Inc. (NYSE:BBY)

Debt to Equity

The debt to equity ratio shows a gradual increase from 0.29 in 2017 to 0.42 in 2019, before declining to 0.3 in 2021 and rising again to 0.41 in 2022. When including operating lease liabilities, this ratio exhibits a pronounced increase starting in 2020, jumping from 0.42 in 2019 to 1.17, then decreasing to 0.89 in 2021 and rising again to 1.3 in 2022. This indicates a significant impact of operating leases on the company's leverage from 2020 onwards.

Debt to Capital

The debt to capital ratio follows a trend similar to debt to equity, rising from 0.22 in 2017 to 0.3 in 2019, then falling to 0.23 in 2021 and slightly increasing to 0.29 in 2022. Including operating lease liabilities, this ratio sees a substantial rise starting 2020, doubling from 0.3 in 2019 to 0.54, then decreasing somewhat but remaining elevated at 0.57 in 2022. This further highlights the increased role of lease obligations in the company's capital structure.

Debt to Assets

Debt to assets ratio remains relatively stable and low over the years when excluding operating leases, hovering around 0.10 to 0.11 until 2019, then declining to 0.07 by 2021 and 2022. With inclusion of operating lease liabilities, the ratio more than doubles starting 2020, reaching 0.26, before moderating to 0.21 and 0.22 in subsequent years. This suggests operating leases significantly affect the debt base relative to company assets.

Financial Leverage

Financial leverage consistently increases from 2.94 in 2017 to 5.8 in 2022, indicating a steady rise in total assets relative to equity. This trend suggests an increasing reliance on debt or other liabilities to finance asset growth over the period.

Interest Coverage

Interest coverage ratio remains robust and improves notably throughout the years, starting at 26.22 in 2017 and reaching an exceptionally high level of 122.12 in 2022. This indicates that the company’s earnings before interest and taxes significantly exceed interest expenses, reflecting strong ability to service debt, with a marked improvement especially in the latest year.

Fixed Charge Coverage

Fixed charge coverage ratio demonstrates a moderate upward trend, increasing from 3.11 in 2017 to 4.81 in 2022. This improvement suggests growing capacity to cover fixed charges such as lease payments and interest, indicating strengthening financial health in relation to these obligations.

Total Debt

The total debt remained relatively stable throughout the analyzed periods, fluctuating slightly around the range of 1229 to 1388 million US dollars. It peaked in 2019 at 1388 million and reached its lowest point in 2022 at 1229 million, showing a slight decrease in the latter years after a period of relative steadiness.

Total Shareholders’ Equity

The shareholders’ equity demonstrated a general decreasing trend over the period. Starting from 4709 million US dollars in 2017, it declined significantly to 3020 million by 2022. Notably, there was a considerable drop between 2017 and 2018, and while it partially recovered in 2021, the overall trajectory remained downward, indicating diminishing equity over time.

Debt to Equity Ratio

The debt to equity ratio exhibited fluctuations consistent with the movements in debt and equity figures. It increased from 0.29 in 2017 to a peak of 0.42 in 2019, reflecting a rise in debt relative to equity. Following a decline to 0.3 in 2021, the ratio climbed again to 0.41 in 2022. This fluctuation suggests variability in the company’s leverage, with a tendency toward higher indebtedness relative to equity in recent years.

Total Debt (Including Operating Lease Liability)

The total debt remained relatively stable between 2017 and 2019, ranging from 1,355 to 1,388 million US dollars. However, there was a sharp increase in 2020 to 4,069 million, maintaining a similar high level through 2021 and 2022 with slight fluctuations ending at 3,938 million. This suggests a significant rise in financial leverage starting in 2020, likely reflecting increased borrowing or recognition of operating lease liabilities.

Total Shareholders’ Equity

Shareholders' equity showed a declining trend from 2017 to 2019, decreasing from 4,709 million to 3,306 million. It then experienced a modest recovery in 2020 to 3,479 million and more notably in 2021 to 4,587 million. However, in 2022, equity declined sharply again to 3,020 million. These fluctuations indicate volatility in equity value, with gains in some years offset by notable declines in others.

Debt to Equity Ratio (Including Operating Lease Liability)

The ratio increased steadily from 0.29 in 2017 to 0.42 in 2019, indicating gradually rising leverage. In 2020, there was a pronounced spike to 1.17, which then decreased to 0.89 in 2021 before climbing again to 1.3 in 2022. This pattern reflects elevated leverage starting in 2020, with more than double the ratio compared to earlier years, suggesting a greater reliance on debt relative to equity.

Overall Analysis

The period from 2017 through early 2019 indicated a conservative financial stance with moderate and stable debt levels and a declining equity base. Beginning in 2020, there was a marked increase in total debt and debt-to-equity ratio, reflecting a strategic shift towards higher leverage or expanded operating lease obligations. The fluctuating shareholders' equity and increased leverage suggest potential responses to market conditions or capital structure adjustments. The elevated leverage levels in recent years warrant monitoring for implications on financial risk and capital sustainability.

Total debt

The total debt exhibited a relatively stable trend with minor fluctuations over the analyzed periods. Initial value was 1,365 million USD in early 2017, slightly decreasing to 1,355 million USD in early 2018, then increasing marginally to 1,388 million USD in early 2019. Following this peak, total debt showed a downward trend reaching 1,271 million USD in early 2020, then rose again to 1,377 million USD in early 2021 before decreasing to the lowest point of the period at 1,229 million USD in early 2022.

Total capital

Total capital presented more pronounced fluctuations during the same timeframe. It started at 6,074 million USD in early 2017, decreasing sharply to 4,967 million USD in early 2018, and continued to decline to 4,694 million USD by early 2019. There was a slight improvement in early 2020 to 4,750 million USD, followed by a notable increase to 5,964 million USD in early 2021. However, the most recent period saw a significant drop to 4,249 million USD, marking the lowest level observed in the data series.

Debt to capital ratio

The debt to capital ratio indicates the proportion of debt in the company's capital structure and showed variability across periods. Starting at 0.22 in early 2017, the ratio increased to 0.27 in early 2018 and peaked at 0.30 in early 2019. It then decreased somewhat to 0.27 in early 2020 and further to 0.23 in early 2021, before rising again to 0.29 in early 2022. This pattern reflects changes in the mix of financing, with periods in which debt constituted a larger share of total capital and other periods where this share contracted.

Overall observations

The financial data reveals a dynamic capital structure with fluctuating levels of total debt and capital. While total debt showed modest variation within a narrow range, total capital experienced more significant changes, resulting in corresponding shifts in the debt to capital ratio. These shifts suggest management adjustments in financing strategies or effects from operational and market factors impacting capital deployment and funding sources. The most recent data points to a relatively higher reliance on debt relative to capital compared to some prior years, which may warrant monitoring for risk assessment purposes.

Total debt (including operating lease liability)

The total debt remained relatively stable between 2017 and 2019, fluctuating slightly from 1365 million to 1388 million US dollars. There was a marked increase in 2020 when the debt surged to 4069 million, maintaining a similar elevated level through 2021 and slightly decreasing to 3938 million in 2022. This indicates a substantial rise in borrowing or lease obligations starting from 2020, which then plateaued.

Total capital (including operating lease liability)

Total capital showed a declining trend from 6074 million in 2017 to 4694 million in 2019. However, it reversed sharply, increasing to 7548 million in 2020 and continuing to rise to a peak of 8669 million in 2021. In 2022, total capital fell back to 6958 million. This pattern suggests an initial contraction in capital base followed by a significant expansion in 2020 and 2021, with a subsequent partial retrenchment.

Debt to capital ratio (including operating lease liability)

The debt to capital ratio consistently increased from 0.22 in 2017 to 0.3 in 2019, reflecting a gradual increase in leverage relative to the capital base. A notable jump occurred in 2020 when the ratio reached 0.54, indicating a significant increase in leverage. Although it slightly decreased to 0.47 in 2021, the ratio climbed again to 0.57 in 2022. This pattern reflects heightened financial leverage, particularly post-2019, with some fluctuations but generally maintaining a high leverage level relative to capital.

Total debt

The total debt amount showed a relatively stable trend over the periods from 2017 to 2022, fluctuating around the value of approximately 1,300 million US dollars. It decreased slightly from 1,365 million in early 2017 to 1,229 million in early 2022. A peak was noted in 2021 at 1,377 million, followed by a decline in 2022.

Total assets

Total assets displayed a noticeable upward trend over the years. Starting at 13,856 million US dollars in 2017, the assets slightly declined through 2018 and 2019, reaching the lowest point of 12,901 million in 2019. Afterward, there was a significant increase, peaking at 19,067 million in 2021 before slightly decreasing to 17,504 million in 2022. Overall, the asset base expanded substantially by the end of the period.

Debt to assets ratio

The debt to assets ratio declined steadily across the reviewed years, moving from 0.10 in 2017 down to 0.07 by 2021 and maintaining that level in 2022. This indicates a reduction in leverage relative to the asset base, signifying a more conservative capital structure with less reliance on debt financing relative to total assets.

Summary of trends

The data indicate that although total debt remained relatively consistent, the growth in total assets led to a meaningful decrease in leverage as measured by the debt to assets ratio. This suggests an improved balance sheet strength and potentially lower financial risk. The peak in total assets in 2021 with a slight retention of increased asset levels in 2022 also points to expanded operational scale or asset acquisition during this period. The consistent reduction in leverage might reflect strategic financial management aimed at strengthening the company’s financial stability.

The financial data exhibits significant shifts in the company's debt structure and asset base over the analyzed periods. Below is a detailed analysis of the trends observed in the key financial metrics.

Total Debt (including operating lease liability)

The total debt remained relatively stable from 2017 to 2019, fluctuating slightly around the 1,350 million US dollar mark. However, a substantial increase is noted in 2020, with total debt nearly tripling to over 4,000 million US dollars. Following this spike, the debt level stabilized but slightly decreased in 2022, indicating a possible effort to manage or reduce liabilities.

Total Assets

Total assets showed a decreasing trend from 2017 through 2019, dropping from approximately 13,856 million US dollars to around 12,901 million. This downward movement reversed in 2020, with a sharp increase to approximately 15,591 million, followed by further growth in 2021, reaching a peak of 19,067 million. In 2022, assets decreased somewhat but remained significantly higher than pre-2020 levels.

Debt to Assets Ratio (including operating lease liability)

The debt to assets ratio was stable and low in the earlier years, near 0.1, reflecting a conservative leverage position. A notable increase occurred in 2020, aligning with the spike in total debt, raising the ratio to 0.26. This was followed by a reduction in 2021 to 0.21, and a slight increase back to 0.22 in 2022, indicating that while leverage remains elevated compared to earlier years, it is somewhat controlled relative to the increased asset base.

Overall, the data suggests that the company underwent a period of increased leveraging and asset expansion starting in 2020. This may reflect strategic investments or structural changes in financing during that period. Despite the significant rise in debt, the asset growth mitigated the impact on leverage ratios to some extent, and recent trends point to efforts to stabilize the financial position.

Total assets

The total assets exhibited a fluctuating trend over the analyzed periods. Initially, total assets decreased from 13,856 million US dollars in early 2017 to 12,901 million US dollars by early 2019. Subsequently, there was a notable increase reaching a peak of 19,067 million US dollars in early 2021. However, this was followed by a decline to 17,504 million US dollars in early 2022. This pattern suggests variability in asset accumulation, with a significant expansion phase around 2020 to 2021 before contracting somewhat in the last reported year.

Total shareholders’ equity

Shareholders’ equity demonstrated a declining trend from 4,709 million US dollars in early 2017 to 3,306 million US dollars by early 2019, indicating a reduction in the residual interest in the assets after liabilities. There was a modest recovery in 2020 to 3,479 million US dollars and a more substantial increase in 2021 to 4,587 million US dollars. Nevertheless, equity sharply declined again to 3,020 million US dollars by early 2022. The fluctuations in equity may reflect changes in retained earnings, dividend policies, or other comprehensive income impacts.

Financial leverage

Financial leverage showed a consistent upward trajectory throughout the period observed. Starting at a ratio of 2.94 in early 2017, it increased progressively each year, peaking at 5.8 in early 2022. This indicates a growing reliance on debt financing relative to equity over time, with the leverage ratio nearly doubling from the start to the end of the period. The increase in financial leverage could imply higher financial risk but also potential for enhanced returns on equity, subject to the company's capacity to service its debt.

The financial data reveals a consistent upward trend in earnings before interest and tax (EBIT) from 2017 through 2022. EBIT increased steadily each year, moving from $1,888 million in 2017 to $3,053 million in 2022. This indicates a strong and continuous improvement in operational profitability over the analyzed period.

Interest expense shows a declining pattern over the same time frame. Starting at $72 million in 2017, interest expense fluctuated slightly in the early years but then steadily decreased, reaching $25 million by 2022. This reduction suggests effective management of debt costs or a decrease in debt levels.

Interest coverage ratio, which measures the company's ability to meet interest obligations from its earnings, improved significantly across the years. The ratio increased from 26.22 in 2017 to an exceptionally high level of 122.12 in 2022. The sharp increase, particularly in the later years, reflects a combination of rising EBIT and declining interest expenses, signifying a substantial enhancement in the company's financial stability and its capacity to cover interest payments comfortably.

Earnings before interest and tax (EBIT)

Steadily increased from $1,888 million in 2017 to $3,053 million in 2022, showing consistent growth in operational profitability.

Interest Expense

Decreased from $72 million in 2017 to $25 million in 2022, indicating reduced cost of debt or lower debt levels.

Interest Coverage Ratio

Improved markedly from 26.22 in 2017 to 122.12 in 2022, demonstrating enhanced ability to cover interest obligations due to increased earnings and reduced interest costs.

The financial data reveals several key trends in earnings, fixed charges, and fixed charge coverage over the six-year period.

Earnings before fixed charges and tax

There is a consistent upward trend in earnings before fixed charges and tax, increasing from 2,678 million US dollars in early 2017 to 3,823 million US dollars by early 2022. This represents a continuous growth in operating profitability, with the most notable acceleration occurring between 2020 and 2022.

Fixed charges

Fixed charges show a gradual decline over the same period, decreasing from 862 million US dollars in 2017 to 795 million US dollars in 2022. The trend is relatively stable with a small but steady reduction in fixed charges year-over-year, indicating effective management or reduction of fixed financial obligations.

Fixed charge coverage ratio

The fixed charge coverage ratio consistently improves, rising from 3.11 times in 2017 to a strong 4.81 times by 2022. This upward movement reflects enhanced ability to cover fixed charges with earnings before fixed charges and taxes, signaling increased financial strength and reduced risk related to fixed financial commitments.

Overall, the data shows improving operational profitability alongside decreasing fixed costs, contributing to a healthier financial position as demonstrated by the strengthening fixed charge coverage ratio.