Blockbuster Inc Referring to the Blockbuster Financial Statements, What Is the Most

Blockbuster Inc. Income Statement for year-ended Dec 31 ($000's)
$$\begin{array} { | c | c | c | } \hline & \underline { \text { Year 1 } } & \underline { \text { Year 2 } } \\\hline \text { Sales } & 4,969,100 & 5,157,600 \\\hline \text { COGS } & 2,036,000 & 2,420,700 \\\hline \text { SG\&A } & 2,390,600 & 2,532,400 \\\hline \text { Depreciation } & 279,000 & 246,600 \\\hline \text { Amortization of Intangibles } & \underline { 180,100 } & \underline { 176,100 } \\\hline \text { Operating Income (Loss) } & 83,400 & - 218,200 \\\hline \text { Interest Expense } & \underline { 116,500 } & \underline { 78,200 } \\\hline \text { Income Before Tax } & - 33,100 & - 296,400 \\\hline \text { Income Tax Expense } & \underline { 45,400 } & \underline { - 56,100 } \\\hline \text { Net Income } & - 78,500 & - 240,300 \\\hline\end{array}$$ Referring to the Blockbuster financial statements, what is the most important underlying reason for the change in ROE?

A) Decrease in cost of goods sold
B) Increase in debt caused the debt/equity ratio to rise
C) Increase in sales resulted in an increase in product returns which caused inventory turnover to decline
D) Increase in cost of goods sold caused a big drop in gross margin
E) Decrease in debt