The following information relates to The Kroger Company for its 2015 and 2014 fiscal years, and Whole Foods Market, Inc. for its 2014 and 2013 fiscal years. THE KROGER COMPANY Selected Financial Information 2015 (amounts in millions, except per share amounts) January 31, February 1, 2014 Total current assets $ 8,911 $8,830 Merchandise inventory 8,178 7,951 Property and equipment, net of depreciation 17,912 16,893 Total assets 30,556 29,281 Total current liabilities 11,403 10,705 Total long-term liabilities 13,711 13,181 Total liabilities 25,114 23,886 Total shareholders' equity 5,442 5,395 Revenue 108,465 98,375 Cost of goods sold 85,512 78,138 Gross profit 22,953 20,237 Operating income 3,137 2,725 Earnings from continuing operations before income tax expense 2,649 2,282 Income tax expense 902 751 Net earnings 1,747 1,531 Basic earnings per share $ 1.75 $ 1.47 WHOLE FOODS MARKET, INC. Selected Financial Information 414 (amounts in millions except per share data) September 28, September 29, 2014 2013 Total current assets $ 1,756 $ 1,980 Merchandise inventory 441 Property and equipment, net of depreciation 2.923 2,428 Total assets 5,744 5,538 Total current liabilities 1,257 1,088 Total long-term liabilities 674 572 Total liabilities 1,931 1,660 Total stockholders' equity 3,813 3,878 Revenues 14,194 12,917 Cost of goods sold 9,150 8,288 Gross profit 5,044 4,629 Operating income 934 883 Earnings from continuing operations before income taxes 946 894 Income tax expense 367 343 Net earnings 579 551 Basic earnings per share $ 1.57 $ 1.48 Required (3) a. Compute the following ratios for the companies' 2014 fiscal years: (1) Current ratio. (2) Average days to sell inventory. (Use average inventory.) 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) Return on sales. (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
