E11.9. Financial Statement Reformulation and Profitability Analysis for Starbucks Corporation (Medium) Refer to the financial statements for Starbucks, the coffee vendor, in Exercise E9.9 in Chapter 9. Be sure to read the notes under the financial statements.

a. Prepare a reformulated income statement for fiscal year 2007 and reformulated balance sheets for 2007 and 2006 in a way that distinguishes opeesting and financing activities and identifies taxes applicable to various components of income.

b. For fiscal year 2007, calculate the following return on common equity (ROCE), return on net operating assets (RNOA), and net borrowing cost (NBC). Use beginning-of-year balance sheet amounts in denominators.

c. Calculate the financing leverage ratio (FLEV) at the beginning of the year and show that the following leverage equation for 2007 is satisfied. ROCE=RNOA+[FLEV x (RNOA - NBC)]

d. Calculate the operating profit margin ratio (PM) and the asset tannover (ATO). Also calculate the operating profit margin ratio from sales.

e. Calculate the operating liability leverage ratio at the beginning of 2007. . The firm's borrowing cost on its short-term commercial paper is 5.5 percent, or 3.6 percent after tax. Show how operating liability leverage levers up the return of net operating assets. Real World Connection See Exercises E8.8, E9.9, E12.8, and E14.10 on Starbucks Corporation.