Balance Sheet for Year-Ended Dec 31 ($000's)

question 28

Multiple Choice

Balance Sheet for year-ended Dec 31 ($000's)

-Blockbuster Inc.
Income Statement for year-ended Dec 31 ($000's)

Referring to the Blockbuster financial statements,what is the most important underlying reason for the change in ROE?

• A) Decrease in cost of goods sold
• B) Increase in debt caused the debt/equity ratio to rise
• C) Increase in sales resulted in an increase in product returns which caused inventory turnover to decline
• D) Increase in cost of goods sold caused a big drop in gross margin
• E) Decrease in debt

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Definitions:

Government-Granted Exclusive Right

A privilege or authority granted by the government to an individual or organization, typically giving them the sole right to produce, use, or sell a particular good or service.

Willingness to Pay

The maximum amount that a consumer is prepared to spend on a good or service.

Profit

The financial gain achieved when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Deadweight Loss

A loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved or is unattainable.