Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Blockbuster Entertainment Corporation operates under the name Blockbuster Video and is engaged primarily in the business of renting video tapes. Shown below are selected data
Blockbuster Entertainment Corporation operates under the name Blockbuster Video and is engaged primarily in the business of renting video tapes. Shown below are selected data from a recent annual report. (Dollar amounts are stated in thou- sands.) Beginning End of the Year of the Year Total current assets $ 54,130 $ 92,592 Total current liabilities. 63,481 83,357 Total assets... 234,698 417,413 Total stockholders' equity. 124,058 208,189 Operating income.. 76,141 Net Income 44,152 The company has long-term liabilities which bear interest at annual rates ranging from 11% to 16%, a. Compute the company's current ratio at (1) the beginning of the year and (2) the end of the year. (Carry to two decimal places.) b. Compute the company's working capital at (1) the beginning of the year, and (2) the end of the year. (Express dollar amounts in thousands.) c. Is the company's short-term debt paying ability improving or deteriorating? As a short-term creditor, would you consider the company to be as good a credit risk as, say, BellSouth-a regional telephone company with a current ratio of .9 to 1? Explain. d. Compute the company's (1) return on average total assets, and (2) return on aver- age stockholders' equity. (Round average assets and average equity to the nearest dollar, and final computations to the nearest 1 percent.) e. As an equity investor, do you think that Blockbuster's management is utilizing the company's resources in a reasonably efficient manner? Explain
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started