Selected financial data of two competitors, Blockbuster Inc. and Movie Gallery, Inc., in a recent year are presented below and on page 91. (All dollars are in millions.)
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Blockbuster Inc.
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Movie Gallery, Inc.
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Income Statement Data for Year
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Net sales
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$ 5,524
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$2,542
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Cost of goods sold
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2,476
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1,012
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Selling and administrative expenses
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2,755
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1,431
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Interest expense
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102
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120
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Other expense
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212
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3
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Income tax expense (refund)
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(76)
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2
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Net income (loss)
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$ 55
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$ (26)
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Blockbuster Inc.
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Movie Gallery, Inc.
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Balance Sheet Data (End of Year)
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Current assets
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$ 1,566
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$ 239
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Property, plant, and equipment (net)
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580
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243
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Intangible assets
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835
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297
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Other assets
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156
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374
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Total assets
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$ 3,137
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$1,153
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Current liabilities
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$ 1,395
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$ 268
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Long-term debt
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851
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1,122
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Total stockholders' equity
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891
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(237)
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Total liabilities and stockholders' equity
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$ 3,137
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$1,153
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Cash from operating activities
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$329
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$(10)
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Cash used for capital expenditures
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79
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20
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Dividends paid
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11
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-0-
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Average shares outstanding
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189.0
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31.8
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Instructions
For each company, compute these values and ratios.
(a) Working capital.
(b) Current ratio. (Round to two decimal places.)
(c) Debt to total assets ratio.
(d) Free cash flow.
(e) Earnings per share.
(f ) Compare the liquidity, profitability, and solvency of the two companies.