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The following financial information relates The Kroger Company and Whole Foods Market Inc. , for fiscal year 20X1 and 20X2. Please do a ratio analysis
The following financial information relates The Kroger Company and Whole Foods Market Inc., for fiscal year 20X1 and 20X2. Please do a ratio analysis and address the following questions from part (a) to (e ). | |||||
THE KROGER COMPANY | |||||
Selected Financial Information | |||||
(amounts in millions, except per share amounts) | |||||
20X2 | 20X1 | ||||
Total current assets | 10,340 | 9,892 | |||
Merchandise inventory | 9,143 | 8,712 | |||
Property and equipment, net of depreciation | 21,016 | 19,619 | |||
Total assets | 36,505 | 33,897 | |||
Total current liabilities | 12,860 | 12,971 | |||
Total long-term liabilities | 16,935 | 14,128 | |||
Total liabilities | 29,795 | 27,099 | |||
Total shareholders equity | 6,710 | 6,798 | |||
Revenue | 115,337 | 109,830 | |||
Cost of goods sold | 89,502 | 85,496 | |||
Gross profit | 23,521 | 22,291 | |||
Operating income | 3,436 | 3,576 | |||
Earnings from continuing operations before income tax expense | 2,914 | 3,094 | |||
Income tax expense | 957 | 1,045 | |||
Net earnings | 1,957 | 2,049 | |||
Basic earnings per share | $2.08 | $2.09 | |||
WHOLE FOODS MARKET, INC. | |||||
Selected Financial Information | |||||
(amounts in millions except per share data) | |||||
20X2 | 20X1 | ||||
Total current assets | 2,145 | 1,975 | |||
Merchandise inventory | 471 | 517 | |||
Property and equipment, net of depreciation | 3,514 | 3,442 | |||
Total assets | 6,676 | 6,341 | |||
Total current liabilities | 1,355 | 1,341 | |||
Total long-term liabilities | 1,891 | 1,776 | |||
Total liabilities | 3,246 | 3,117 | |||
Total stockholders equity | 3,430 | 3,224 | |||
Revenues | 16,030 | 15,724 | |||
Cost of goods sold | 10,633 | 10,313 | |||
Gross profit | 5,397 | 5,411 | |||
Operating income | 410 | 816 | |||
Earnings from continuing operations before income taxes | 417 | 827 | |||
Income tax expense | 172 | 320 | |||
Net earnings | 245 | 507 | |||
Basic earnings per share | $1.49 | $1.55 | |||
a. Compute the following ratios for the companies 20X2 fiscal years: | |||||
(1) Current ratio. | |||||
The Kroger Company = | |||||
Whole Foods Market, Inc. = | |||||
(2) Average days to sell inventory. (Use average inventory.) | |||||
The Kroger Company = | |||||
Whole Foods Market, Inc. = | |||||
(3) Debt-to-assets ratio. | |||||
The Kroger Company = | |||||
Whole Foods Market, Inc. = | |||||
(4) Return on investment. (Use average assets and use earnings from continuing operations rather than net earnings.) | |||||
The Kroger Company = | |||||
Whole Foods Market, Inc. = | |||||
(5) Gross margin percentage. | |||||
The Kroger Company = | |||||
Whole Foods Market, Inc. = | |||||
(6) Asset turnover. (Use average assets.) | |||||
The Kroger Company = | |||||
Whole Foods Market, Inc. = | |||||
(7) Return on sales. (Use earnings from continuing operations rather than net earnings.) | |||||
The Kroger Company = | |||||
Whole Foods Market, Inc. = | |||||
(8) Plant assets to long-term debt ratio. | |||||
The Kroger Company = | |||||
Whole Foods Market, Inc. = | |||||
b. Which company appears to be more profitable? Explain your answer and identify ALL possible ratio(s) from Part 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 ALL possible ratio(s) from Part a you used to reach your conclusion. | |||||
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