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Author Question: Blockbuster is a North American video and DVD sales and rental chain. Forecast the financial ... (Read 49 times)

rl

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Blockbuster is a North American video and DVD sales and rental chain. Forecast the financial statements for Blockbuster for Year 3. Use the percent of sales method based on Year 2 and the assumptions listed below. Please note the ratios to sales provided in the table which are useful for making the forecast. In the event that taxable income is negative, calculate taxes in the usual way. Negative taxes can be interpreted as a tax refund.
Sales growth of 10%. The cost of debt is 7.5%. The tax rate is 35%. The depreciation rate is 25%. CAPEX is $200M. The following accounts are held constant: Goodwill and Common Stock. Long Term Debt is the PLUG account. No dividends.

Blockbuster Inc.
Income Statement and Balance Sheet
As of December 31, Year 2 ($000s)
Year 2RatiosForecast
Revenue$5,157,600 $5,673,360 
COGS2,420,7000.469346
SG&A2,708,5000.525147
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 Assets716,4000.138902
PP&E909,000
Goodwill6,127,0006,127,000
Total Assets$7,752,400 
LIABILITIES AND OWNERS EQUITY
Total Current Liabilities1,268,8000.246006
Long Term Debt734,900
Total Liabilities$2,003,700 
Owners Equity
Common Stock6,075,8006,075,800
Retained Earnings-327,100
Total Stockholder Equity5,748,700
Total Liabilities and Owners Equity7,752,400  
What are the additional funds needed in Year 3?
◦ -$225.363 million
◦ $63.243 million
◦ $125.363 million
◦ $189.900 million
◦ $299.990 million


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Marked as best answer by rl on Apr 25, 2021

carolinefletcherr

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