Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please explain how to solve this problem. Analyzing Kroger and Whole Foods The following information relates to The Kroger Company for its 2015 and 2014
Please explain how to solve this problem.
Analyzing Kroger and Whole Foods | ||||||||||
The following information relates to The Kroger Company for its 2015 and 2014 fisccal years, and Whole Foods Market Inc. for its 2014 and 213 fiscal years. | ||||||||||
The Kroger Company | ||||||||||
Selected Financial Information | ||||||||||
(amounts in millions, except per share amount) | ||||||||||
31-Jan-15 | 1-Feb-14 | |||||||||
Total current assets | $8,911.00 | $8,830.00 | ||||||||
Merchandise inventory | $8,178.00 | $7,951.00 | ||||||||
Property and equipment, net of depreciation | $17,912.00 | $16,893.00 | ||||||||
Total assets | $30,556.00 | $2,981.00 | ||||||||
Total current liabilities | $11,403.00 | $10,705.00 | ||||||||
Total long-term liabilities | $13,711.00 | $13,181.00 | ||||||||
Total liabilities | $25,114.00 | $23,886.00 | ||||||||
Total shareholders equity | $5,442.00 | $5,395.00 | ||||||||
Revenues | $108,465.00 | $98,375.00 | ||||||||
COGS | $85,512.00 | $78,138.00 | ||||||||
Gross profit | $22,953.00 | $20,237.00 | ||||||||
Operating income | $3,137.00 | $2,725.00 | ||||||||
Earnings from continuing operations, before income tax expense | $2,649.00 | $2,282.00 | ||||||||
Income Tax expense | $902.00 | $751.00 | ||||||||
Net earnings | $1,747.00 | $1,531.00 | ||||||||
Basic earnings per share | $1.75 | $1.47 | ||||||||
Whole Foods Market, Inc | ||||||||||
Selected Financial Information | ||||||||||
(amounts in millions, except per share amount) | ||||||||||
28-Sep-14 | 29-Sep-13 | |||||||||
Total current assets | $1,756.00 | $1,980.00 | ||||||||
Merchandise inventory | $441.00 | $414.00 | ||||||||
Property and equipment, net of depreciation | $923.00 | $2,428.00 | ||||||||
Total assets | $5,744.00 | $5,538.00 | ||||||||
Total current liabilities | $1,257.00 | $1,088.00 | ||||||||
Total long-term liabilities | $674.00 | $572.00 | ||||||||
Total liabilities | $1,931.00 | $1,660.00 | ||||||||
Total shareholders equity | $3,813.00 | $3,878.00 | ||||||||
Revenues | $14,194.00 | $12,917.00 | ||||||||
COGS | $9,150.00 | $8,288.00 | ||||||||
Gross profit | $5,044.00 | $4,629.00 | ||||||||
Operating income | $934.00 | $883.00 | ||||||||
Earnings from continuing operations, before income tax expense | $946.00 | $894.00 | ||||||||
Income Tax expense | $367.00 | $343.00 | ||||||||
Net earnings | $579.00 | $551.00 | ||||||||
Basic earnings per share | $1.57 | $1.48 | ||||||||
Required | ||||||||||
a. Compute the following ratios for the companies 2014 fiscal years: | ||||||||||
1. Current ratio. | ||||||||||
2. Average days to sell inventory. (Use average inventory.) | ||||||||||
3. Debt to assets ratio. | ||||||||||
4. Return on investment. (Use average assets and use earnings from continuing operations rather than net earnings.) | ||||||||||
5. Gross margin percentage. | ||||||||||
6. Asset turnover. (Use average assets.) | ||||||||||
7. Net margin. (Use earnings from continuing operations rather than net earnings.) | ||||||||||
8. Plant assets to long-term debt ratio. | ||||||||||
b. Which company appears to be more profitable? Explain your answer and identify which ratio(s) from Requirement a you used to reach your conclusion. | ||||||||||
c. Which company appears to have the higher level of financial risk? Explain your answer and identify which ratio(s) from Requirement a you used to reach your conclusion. | ||||||||||
d. Which company appears to be charging higher prices for its goods? Explain your answer and identify which ratio(s) from Requirement a you used to reach your conclusion. | ||||||||||
e. Which company appears to be the more efficient at using its assets? Explain your answer and identify which ratio(s) from Requirement a you used to reach your conclusion. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started