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4,969,100 5,157,600 2,420,700 2,390,600 2,532,400 Depreciation 279,000 246,600 A

ID: 2745970 • Letter: 4

Question

4,969,100

5,157,600

2,420,700

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

-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?

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

Explanation / Answer

Gross margin Sales-Cost of goods sold Year 1 gross margin $                               2,933,100 4969100-2036000 Year 2 gross margin $                               2,736,900 5157600-2420700 Change in gross margin $                                (196,200) 2736900-2933100

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