Blockbuster is a North American video and DVD sales and rental chain.

Blockbuster is a North American video and DVD sales and rental chain. Use the equation approach and Blockbuster’s financial statement for Year 2 to calculate additional funds needed (AFN) in Year 3.

Assume that sales in Year 3 will be $5.67336 billion. Assume a 0% dividend payout rate.

Blockbuster Inc.
Income Statement and Balance Sheet
As of December 31, Year 2 ($000’s)
Revenue $ 5,157,600
COGS 2,420,700
SG&A 2,708,500
Dep. Exp. 246,600
EBIT -218,200
Int. Exp. 78,200
Income Before Tax -296,400
Income Taxes -56,100
Net Income -$ 240,300
ASSETS
Total Current Assets 716,400
PP&E 909,000
Goodwill 6,127,000
Total Assets $ 7,752,400
LIABILITIES AND OWNERS EQUITY
Total Current Liabilities 1,268,800
Long Term Debt 734,900
Total Liabilities $ 2,003,700
Owners Equity
Common Stock 6,075,800
Retained Earnings -327,100
Total Stockholder Equity 5,748,700
Total Liabilities and Owners Equity $ 7,752,400

A) -$225.363 million
B) $63.243 million
C) $125.363 million
D) $189.900 million
E) $299.990 million

ANSWER

E