CASE 8-4 CERTIFIED ORGANIC

Whole Foods Market, Inc. included these statements in its 2010 annual report.*

WHOLE FOODS MARKET, INC.

Consolidated Balance Sheets

(in thousands)

September 26, 2010 and September 27, 2009

Assets 2010 2009

Current Assets:

Cash and cash equivalents $ 131,996 $ 430,130

Short-term investments %u2013 available-for-sale securities 329,738 %u2014

Restricted cash 86,802 71,023

Accounts receivable 133,346 104,731

*%u201CWhole Foods Market is the world%u2019s leading natural and organic foods supermarket and America%u2019s first national

%u201CCertified Organic%u201D grocer.%u201D 10-K

Source: Whole Foods Market, Inc. 2010 10-K

Assets 2010 2009

Merchandise inventories $ 323,487 $ 310,602

Prepaid expenses and other current assets 54,686 51,137

Deferred income taxes 101,464 87,757

Total current assets 1,161,519 1,055,380

**Property and equipment, net of accumulated

depreciation and amortization 1,886,130 1,897,853

Long-term investments %u2013 available-for-sale securities 96,146 %u2014

Goodwill 665,224 658,254

Intangible assets, net of accumulated amortization 69,064 73,035

Deferred income taxes 99,156 91,000

Other assets 9,301 7,866

Total assets $3,986,540 $3,783,388

Liabilities and Shareholders Equity

Current Liabilities:

Current installments of long-term debt and capital

lease obligations $ 410 $ 389

Accounts payable 213,212 189,597

Accrued payroll, bonus and other benefits due team

members 244,427 207,983

Dividends payable %u2014 8,217

Other current liabilities 289,823 277,838

Total current liabilities 747,872 684,024

Long-term debt and capital lease obligations, less

current installments 508,288 738,848

Deferred lease liabilities 294,291 250,326

Other long-term liabilities 62,831 69,262

Total liabilities 1,613,282 1,742,460

Series A redeemable preferred stock, $0.10 par value,

425 shares authorized; zero and 425 shares issued

and outstanding at 2010 and 2009, respectively %u2014 413,052

Shareholders%u2019 equity:

Common stock, no par value, 300,000 shares

authorized; 172,033 and 140,542 shares issued and

outstanding at 2010 and 2009, respectively 1,773,897 1,283,028

Accumulated other comprehensive income (loss) 791 (13,367)

Retained earnings 598,570 358,215

Total shareholders%u2019 equity 2,373,258 1,627,876

Commitments and contingencies

Total liabilities and shareholders%u2019 equity $3,986,540 $3,783,388

**Property and equipment include construction in progress and equipment not yet in service (2010 %u2013 $120,845;

2009 %u2013 $130,068)

WHOLE FOODS MARKET, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

Fiscal years ended September 26, 2010, September 27, 2009 and September 28, 2008

2010 2009 2008

Sales $9,005,794 $8,031,620 $7,953,912

Cost of goods sold and occupancy costs 5,870,393 5,277,310 5,247,207

Gross profit 3,135,401 2,754,310 2,706,705

Direct store expenses 2,375,716 2,145,809 2,107,940

General and administrative expenses 272,449 243,749 270,428

Pre-opening expenses 38,044 49,218 55,554

Relocation, store closure and lease termination costs 11,217 31,185 36,545

Operating income 437,975 284,349 236,238

Interest expense (33,048) (36,856) (36,416)

Investment and other income $ 6,854 $ 3,449 $ 6,697

Income before income taxes 411,781 250,942 206,519

Provision for income taxes 165,948 104,138 91,995

Net income 245,833 146,804 114,524

Preferred stock dividends 5,478 28,050 %u2014

Income available to common shareholders $ 240,355 $ 118,754 $ 114,524

Basic earnings per share $ 1.45 $ 0.85 $ 0.82

Weighted average shares outstanding 166,244 140,414 139,886

Diluted earnings per share $ 1.43 $ 0.85 $ 0.82

Weighted average shares outstanding, diluted basis 171,710 140,414 140,011

Dividends declared per common share $ %u2014 $ %u2014 $ 0.60

Required

a. Compute the following for 2010 and 2009:

1. Net profit margin

2. Total asset turnover (use year-end assets)

3. Return on assets (use year-end assets)

4. Operating income margin

5. Return on operating assets (use year-end assets)

6. Sales to fixed assets (use year-end fixed assets)

7. Return on investment (use year-end balance sheet accounts)

8. Return on total equity (use year-end equity)

9. Gross profit margin

b. Comment on the trends in (a).