Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need this back ASAP. Please use the attached documents as graphs could not be shown here. Calculating Ratios: Below are several financial statement items

I need this back ASAP. Please use the attached documents as graphs could not be shown here. Calculating Ratios: Below are several financial statement items for two grocery chains, Whole Foods Market, an upscale organic grocer, and The Kroger Co. a mainstream grocer. ($ millions) a. Calculate each company?s return on assets (ROA) and return on equity (ROE). Comment on any differences you observe. b. Disaggregate the ROA for each company into profit margin (PM) and asset turnover (AT). Explain why Whole Foods has a higher ROA, is it because of PM or AT or both? c. Place Kroger and Whole Foods on the graph below. Discuss how they both compare to other industries and its own industry average (efficient line). Please give one recommendation each on how Kroger and Whole Foods could improve their position. Whole Foods Market The Kroger Co. Net income $ 246 $ 1,133 Sales 9,006 82,189 Average assets 3,885 23,316 Average stockholders? equity 2,001 5,112 a) Ratio Whole Foods Kroger ROE ROA 0.063 0.049 Observation of difference in ROA and ROE b) Ratio Whole Foods Kroger AT PM Observation of drivers of ROA Interpretation Whole Foods Kroger Across Industry comparison Efficient line (its own industry) Recommendation image text in transcribed

Calculating Ratios: Below are several financial statement items for two grocery chains, Whole Foods Market, an upscale organic grocer, and The Kroger Co. a mainstream grocer. ($ millions) a. Calculate each company's return on assets (ROA) and return on equity (ROE). Comment on any differences you observe. b. Disaggregate the ROA for each company into profit margin (PM) and asset turnover (AT). Explain why Whole Foods has a higher ROA, is it because of PM or AT or both? c. Place Kroger and Whole Foods on the graph below. Discuss how they both compare to other industries and its own industry average (efficient line). Please give one recommendation each on how Kroger and Whole Foods could improve their position. Whole Foods Market $ 246 9,006 3,885 2,001 Net income Sales Average assets Average stockholders' equity a) Ratio ROE Whole Foods Kroger Whole Foods Kroger ROA Observation of difference in ROA and ROE b) Ratio AT PM Observation of drivers of ROA The Kroger Co. $ 1,133 82,189 23,316 5,112 Interpretation Across Industry comparison Efficient line (its own industry) Recommendation Whole Foods Kroger

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting Principles And Applications

Authors: Horace Brock, Linda Herrington, La Vonda Ramey

7th Edition

0071115609, 978-0071115605

More Books

Students also viewed these Accounting questions

Question

What information should be included in a letter extending credit?

Answered: 1 week ago

Question

Draw a picture consisting parts of monocot leaf

Answered: 1 week ago

Question

Always have the dignity of the other or others as a backdrop.

Answered: 1 week ago