Below are comparative income statements and balance sheets for Stabucks Corporation, the retail coffee vendor, fiscal year ending September 30, 2007, along with a statement of shareholders’ equity. Read the statement along with the notes under them, then answer the following questions:

(a) Prepare a reformulated equity statement for fiscal year 2007 that separate net payout to shareholders from comprehensive income.

(b) Prepare a reformulated comprehensive income statement for fiscal year 2007, along with reformulated balance sheets for 2007 and 2006.

(c) 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. Also calculate the financial leverage ratio (FLEV) at the beginning of the 2007 fiscal year.

Notes:

1. Short-term and long-term investments, available for sale, are debt securities.

2. Short-term investments listed as trading securities ate investments in equity mutual funds as part of a defined contribution plan for employees. The corresponding deferred compensation liability ($86,400 thousand in 2007) is included in accrued compensation and related Costs.

3. $40,000 thousand of cash and cash equivalents in both 2007 and 2006 is working cash used in operations.

4. Net interest and other income in the 2007 income statement includes the following (in thousands):

Interest income ............... $ 19,700

Interest expense .............. (38,200)

Realized gain on available-for-sale investments .... 3,800

Gain on assets sales ............. 26,032

Other operating charges ............ (8,913)

$ 2,419

5. Income from equity investees is reported after tax.

6. The firm's combined state and federal statutory tax rate is 38.4 percent.

7. Unrealized holding losses incomprehensive income refer to losses on available-for-sale debt securities.