The following information relates to The Kroger Company for its 2015 and 2014 Wh
ID: 2591381 • Letter: T
Question
The following information relates to The Kroger Company for its 2015 and 2014 Whole Foods Market, Inc. for its 2014 and 2013 fiscal years fiscal 4) THE KROGER COMPANY Selected Financial Information (amounts in millions, except per share amounts) 8) January 31, 2015 February 1, fro 2014 8,830 7,951 $ 8,911 8,178 17.912 30,556 11,403 13,711 25,114 5,442 108,465 85,512 22,953 3,137 tif Total current assets Merchandise inventory Property and equipment, net of depreciation Total assets Total current liabilities Total long-term liabilities Total liabilities Total shareholders' equity Revenues Cost of goods sold Gross profit Operating income Earnings from continuing operations 16,893 29,281 10,705 3,181 23,886 5,395 98,375 78,138 20,237 2,725 ide ATC 9 Presen The fo Cater Orad Starb Tilfar 2,282 751 1,531 1.47 2,649 902 before income tax expense Income tax expense Net earnings Basic earnings per share 1,747 $1.75Explanation / Answer
a. COMPUTATION OF RATIOS FOR THE COMPANIES' 2014 FISCAL YEARS:
Working Notes:
(1) Inventory Turnover Ratio = Cost of goods sold / Average inventory = 9,150 / 427.50 = 21.40 times
(2) Total Plant Assets = Total Assets - Total current Assets - Property and Equipment
= 5,744 - 1,756 - 2,923 = $1,065
Inventory turnover ratio and amount of plant asets have been calculated in the same manner as above.
b. Whole foods Inc. appears to be more profitable as it has a higher net margin as well as gross margin ratio as compared to the Kroger company.
c. Kroger Company appears to be having a higher financial risk as it has a higher debt to assets ratio as compared to the Whole foods Market.
d. Kroger Company appears to be charging higher prices for its goods as it has a lower gross margin ratio.
e. Kroger Company appears to be using its assets more efficiently as it has a higher asssets turnover ratio.
RATIOS FORMULA WHOLE FOODS MARKET,INC. 1. Current ratio Current Assets / Current Liabilities 1,756 / 1,257 = 1.39:1 2. Average Days to sell inventory 365 / Inventory Turnover Ratio 365 / 21.40 = 17.05 days 3. Debt to assets Ratio (Total debt to Total assets) * 100 (1,931 / 5,744) * 100 = 33.61% 4. Return on invetments (Earnings from continuing operations / average assets) * 100 (946 / 5,641) * 100 = 16.77% 5. Gross Margin Percentage (Gross profit / Revenues) * 100 (5,044 / 14,194) * 100 = 35.53% 6. Assets Turnover (Revenue / Average assets) * 100 (14,194 / 5,641) * 100 = 251.62% 7. Net Margin (Earnings from continuing operations/ Revenue ) * 100 (946 / 14,194) * 100 = 6.66% 8. Plant Assets to long term debt ratio (Plant Assets / Long term debt) * 100 (1,065 / 674) * 100 = 158.01% *--------------*--------------*Related Questions
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