Given the Debt Ratio and Debt/Equity Ratio for CVS in 2014 is 0.488 and 0.954; in 2015 is 0.602 and 1.517

(where the debt ratio= total liability/total asset, and debt/equity ratio is total liability/stockholder's equity)

Questions:

1. Based on the data above, assess the Companys overall leverage position. What would you estimate the industry averages to be for the Debt Ratio and the Debt/Equity Ratio? Please explain.

2. Explain the relationship between the Return on Investment and the Return on Equity, and the concept of Financial Leverage. Would you expect the percentage difference between the Return on Investment and Return on Equity to be high or low for a firm that has a high degree of Financial Leverage?