Bed Bath and Beyond Business Risk Bed Bath & Beyond Inc. is a national chain of 575 retail stores selling household goods (bedding, bath items and kitchen textiles) and home furnishings (kitchen and tableware, small appliances and basic household items). In 2003, Bed Bath and Beyond reported annual revenue (gross profit) of approximately $1.8 billion, net income of $339 million, and net sales of $4.5 billion, representing growth of 22 percent. % of revenues and 32% of income compared to the previous year. In addition to the 575 Bed Bath and Beyond stores, BBBY also owns 30 Harmon Stores, a discount retailer of health and beauty products, and 24 Christmas Tree Shops, a retailer of home decor, gifts and seasonal items. The results of operations for both Harmon Stores and Christmas Tree Shops are included in the companies' consolidated operating results and have been since the acquisition date. Bed Bath and Beyond is currently the largest hypermarket home goods retailer, although their market share is only 4%. Competitors such as Target, Wal-Mart and JC Penney offer a wider variety of products such as clothing and electronics. Since 2002, growth has been the result of the acquisition of the Christmas Tree Shops and Harmon Stores. Additionally, BBBY believes that its product offerings, customer service and advertising program have contributed to the company's financial success. The business risk in the case of BBBY is low if you only consider that the products sold are manufactured by branded companies, so any products needing repair could be sent directly to the branded company. Moving on to BBBY and that BBBY has no control over the quality of the products it sells and that there are no significant switching costs. However, their operational advantage rating is high at 2.93 (Figure 1), which would indicate high business risk. If management adds fixed operating costs to its business operations, without an increase in sales, the company's profit declines and it becomes possible for total costs – variable plus fixed – to exceed sales and for the company to report a loss. Debt/Total CapitalAlthough BBBY's balance sheet is strong, there are risks of having too much liquidity. That is, the risk of not attracting or retaining investors, due to their desire to maximize their returns. When an investor sees a lot of cash on the balance sheet, it may question the company's ability to manage its capital structure efficiently and therefore question its ability to maximize shareholder value..