Please use the followingfnmcial statements for questions 1 and 2 StarbuckEaknce Shest (in m illions ofdolkr) 2007 2006 2005 1004 Cash and equlents Short-tem nvestm ents Account recenbb Inventories Prepa id Insurance nd Lase Deferred Incometaxes (net) -Incometaxa not paid Totalcurrent ssets $261 13 74 $145 $157$141$133$50E $288 $224$1$140 $692 $536 $546 $123 4?$127 129 1,696$%1,530$$1.20? $1,351 $50 36 $21 $166 $2.690$2.288$%1,842$1,551 $259 $219 $216 $219 $167 $151 $202 Iqutr and other nveatm ent. Tet p kmt and equpment (netof dep recitn) Other sscts Other intangb le ssets (ashdepost from unanedsb) Totalassets $5,343$H,429$3.514$3.390 Accounts paTable Com mrcia i Peper end short term borrowings (Notes Pnbe) Accruet (Compnsation, OccupancT) Accrued taxes $91 41 $221 99 $%64$568$475$362 $296$231$175$221 $2,155$%1.936$1.2273746 $2 Current porthn of hngtam debt Totalcurrent labilti Doforred ncometaxe Long-tsm bonds Other hntam labilties Deferred Eent, asset retirement oblgrtions $550 $2 $354$263$4 145 059 $2.201 $1.424 s9 TotaI debt Common stock 00,000,000 shares) Paid in cp tal Retaned an in ncude repurchase ofcommon stocks) Totlcommon equt TotaI lubiltis and eu 39 $2.244 $2,188 $2,960 s1,4a $2.284 $2,228$%2,090 2,474 $5.343$4.4293,5143,390 1. Please calculate Starbucks'DebtRatio for each year. Do we want this ratio higher or lower? Did the company's performance improve or decline over that period? 2. Please compare Starbucks' debtratio in 2007 to the industryaverage which is givenbelow for each measure. Was Starbucks doing better compared to the industry? Finanial Ratios Industry Total Asset Tumover - Sales/Total Assets Average Collection Period (Days)-Account Receivables/Daily Sales Operating Margin (EBIT)-EBIT/ Sales Debtratio DIA Rebum on Average Asset-Net ncome to Comn Stocks /Average Assets Retumon Average Equity-Net. come to Common Stodks /Average Equity 1.53 11.49 0.14 0.10 0.19