2. Please compare Starbucks debt ratio in 2007 to the industry average which is given below for each measure. Was Starbucks doing better compared to the industry?

Financial Ratios	Industry
Total Asset Turnover = Sales /Total Assets	1.53
Average Collection Period (Days) = Account Receivables/Daily Sales	11.49
Operating Margin (EBIT) =EBIT/ Sales	0.14
Debt ratio= D/A	0.42
Return on Average Asset = Net Income to Common Stocks /Average Assets	0.10
Return on Average Equity= Net Income to Common Stocks /Average Equity	0.19
Interest Coverage After Tax = (Net Income + Interest) / Interest	19.42

3. ABC Corp.s equity multiplier is 1.25. What is its debt ratio?

4. Easy Corp.s return on assets measure is 0.20 (20%. Its return on equity measure is 0.25 (25%). What is the firms equity multiplier?

5. Decorative Paintings has total debt of $69,000, total equity of $445,000, and a return on equity of 10 percent. What is the return on assets?

6. If equity multiplier for a firm is 4, what is the debt ratio for that firm?

7. ________ measures the percentage of each sales dollar remaining after all costs and expenses, including interest, taxes, and preferred stock dividends, have been deducted.

A) Net profit margin

B) Operating profit margin

C) Gross profit margin

D) Earnings available to common shareholders

8. ________ measures the return earned on the common stockholders' investment in the firm.

A) Net profit margin

B) Price/earnings ratio

C) Return on equity

D) Return on total assets

9. A firm with sales of $1,000,000, net profits after taxes of $30,000, total assets of $1,500,000, and common stockholders' investment of $750,000 has a return on equity of ________.

A) 20 percent

B) 15 percent

C) 3 percent

D) 4 percent

10) The DuPont formula allows a firm to break down its return into the net profit margin, which measures the firm's profitability on sales, and its total asset turnover, which indicates how efficiently the firm has used its assets to generate sales.

TRUE FALSE