BEST BUY CO INC Fair Value Disclosure
Fair value measurements are reported in one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data).
Recurring Fair Value Measurements
Financial assets and liabilities accounted for at fair value were as follows ($ in millions):
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| Fair Value |
| Fair Value at | ||||||
Assets |
| Balance Sheet Location(1) |
| Hierarchy |
| February 1, 2025 |
| February 3, 2024 | ||||
Money market funds(2) |
| Cash and cash equivalents |
| Level 1 |
| $ | 439 |
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| $ | 330 |
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Time deposits(3) |
| Cash and cash equivalents |
| Level 2 |
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| 150 |
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| 60 |
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Money market funds(2) |
| Other current assets |
| Level 1 |
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| 140 |
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| 182 |
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Time deposits(3) |
| Other current assets |
| Level 2 |
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| 50 |
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| 50 |
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Marketable securities that fund deferred compensation(4) |
| Other assets |
| Level 1 |
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| 39 |
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| 48 |
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Liabilities |
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Interest rate swap derivative instruments(5) |
| Long-term liabilities |
| Level 2 |
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| 14 |
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| 11 |
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(1)Balance sheet location is determined by the length to maturity at date of purchase and whether the assets are restricted for particular use.
(2)Valued at quoted market prices in active markets at period end.
(3)Valued at face value plus accrued interest at period end, which approximates fair value.
(4)Valued using the performance of mutual funds that trade with sufficient frequency and volume to obtain pricing information on an ongoing basis.
(5)Valued using readily observable market inputs. These instruments are custom, over-the-counter contracts with various bank counterparties that are not traded on an active market. See Note 5, Derivative Instruments, for additional information.
Nonrecurring Fair Value Measurements
In fiscal 2025, we recorded a goodwill impairment related to our Best Buy Health reporting unit. Refer to Note 3, Goodwill and Intangible Assets, for additional information.
Fair Value of Financial Instruments
The fair values of cash, certain restricted cash, receivables, accounts payable and other payables approximated their carrying values because of the short-term nature of these instruments. If these instruments were measured at fair value in the financial statements, they would be classified as Level 1 in the fair value hierarchy. Fair values for other investments held at cost are not readily available, but we estimate that the carrying values for these investments approximate their fair values.
Long-term debt is presented at carrying value on our Consolidated Balance Sheets. If our long-term debt were recorded at fair value, it would be classified as Level 2 in the fair value hierarchy. Long-term debt balances were as follows ($ in millions):
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| February 1, 2025 |
| February 3, 2024 | ||||||||||||
| Fair Value |
| Carrying Value |
| Fair Value |
| Carrying Value | ||||||||
Long-term debt(1) | $ | 1,031 |
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| $ | 1,136 |
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| $ | 1,022 |
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| $ | 1,139 |
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(1)Excludes debt discounts, issuance costs and finance lease obligations.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.