Information: Blockbuster Inc. Income Statement for year-ended Dec 31 ($000\'s) Y
ID: 2622205 • Letter: I
Question
Information:
Blockbuster Inc.
Income Statement for year-ended Dec 31 ($000's)
Year 1
Year 2
Sales
4,969,100
5,157,600
COGS
2,036,000
2,420,700
SG&A
2,390,600
2,532,400
Depreciation
279,000
246,600
Amortization of Intangibles
180,100
176,100
Operating Income (Loss)
83,400
-218,200
Interest Expense
116,500
78,200
Income Before Tax
-33,100
-296,400
Income Tax Expense
45,400
-56,100
Net Income
-78,500
-240,300
QUESTION:
Year 1
Year 2
Sales
4,969,100
5,157,600
COGS
2,036,000
2,420,700
SG&A
2,390,600
2,532,400
Depreciation
279,000
246,600
Amortization of Intangibles
180,100
176,100
Operating Income (Loss)
83,400
-218,200
Interest Expense
116,500
78,200
Income Before Tax
-33,100
-296,400
Income Tax Expense
45,400
-56,100
Net Income
-78,500
-240,300
Referring to the Blockbuster financial statements, what is the change in Gross Margin from Year 1 to Year 2? (Delta GM = GM2 - GM1)Explanation / Answer
gross margin = gross profit/sales = sales - COGS/sales
gm2 = 5157600-2420700/5157600 = 53.06%
gm1 = 4969100-2036000/4969100 = 59.03%
chsnge in margin = - 5.96%