This exercise is built around Whole Foods Markets financial statements from the chapter. Average common shareholders equity for 2012 was $3.397 billion, and a 40% income tax rate should be used as needed. Refer to Exhibits 5.1 and 5.6 from the chapter.

Required:

1. Whole Foods earned an ROA of 9.7% in 2012. What was ROCE that year? (Round your answer to 1 decimal place.)

2. ROA at the company fell to 9.4% in 2015. What was ROCE that year? (Round your answer to 1 decimal place.)

3. Did financial leverage help or hurt Whole Foods Market in 2015?

1.ROCE 2012 %

2.ROCE 2015 %

3.Did financial leverage help or hurt Whole Foods Market in 2015?

EXHIBIT 5.1 Whole Foods Market Comparative Income Statements (s in mittons) Sales Cost of goods sold and occupancy costs 2015 2014 2013 2012 $15.389 $14,194 $12,917 $11,699 99739.150 8,288 7543 5416 5,044 4,629 4,156 4.472 4032 3,682 3,355 Gross profit Selling, general and administrative expenses Pre-opening expenses Relocation, store closure and lease termination costs 52 12 883 47 10 744 67 67 16 861037 934 12 Operating income 11 878 342 investment and other income, net of interest expense 894 343 752 286 Income before income taxes 367 Provision for income taxes - ? Net income S 536 $ 579 551 466