1. Examine Exhibit 7 in detail. How important are each of the underlying financial assumptions in the ROA forecast? What assumptions (i.e., margins, asset turnover, growth) play the biggest role in driving the anticipated improvements in ROA?
2. Do you agree with the existing financial assumptions in the Deutsche Bank forecast? If so, why? If not, what adjustments would you make to the model? How to prepared to defend the basis of forecast for Whole Foods' performance.

Exhibit 7 WHOLE FOODS MARKET Deutsche Bank Model (millions of USD, except per share figures) Actual Actual Actual Forecast Forecast At Fiscal Year End 2011 2012 2013 2014 2015 Store Growth 4.0% 7.7% 8.1% 10.5% 12.6% Sales Growth 12.2% 15.7% 10.4% 11.1% 14.0% EBITDA Margin 8.5% 9.0% 9.5% 9.4% 9.8% Tax Rate 38.1% 38.4% 38.8% 39.0% 39.0% Current Asset Turnover 7.0 5.6 6.5 7.0 7.1 Current Liabilities Turnover 10.5 10.9 10.7 10.5 10.5 Net PP&E / Store 6.4 6.5 6.7 6.7 6.7 Annual Dep. & Amort. / Store 1.00 0.93 0.94 0.94 0.94 Stores 311 335 362 400 450 Sales 10,108 1 1,699 12,917 14,351 16,360 EBITDA 859 1,055 1,222 1,352 1,600 Dep. & Amort. 311 311 339 376 423 EBIT 548 744 883 976 1,176 Taxes 209 286 343 381 459 Net Income 339 458 540 596 717 Shares Outstanding 350 364 372 372 372 Earnings per Share 0.97 1.26 1.45 1.60 1.93 Current Assets 1,453 2,103 1,980 2,050 2,304 Current Liabilities 880 977 1,088 1,238 1,406 Net Working Capital 573 1,126 892 812 868 Net PP&E 1,997 2,193 2,428 2,680 3,018 Return on Capital 13.2% 13.8% 16.3% 17.1% 18.3% Source: Company Financial Reports, Deutsche Bank Analyst report and casewriter estimates