cquilg Return on p. Earnings per share q. Book value per share of common stock.
ID: 2337552 • Letter: C
Question
cquilg Return on p. Earnings per share q. Book value per share of common stock. r. Price-carnings ratio (market price per share: 2018, S11.75: 2019, s12.50). s. Dividend yield on common stock K, COMMUNICATE Analyzing Kroger and Whole Foods ATC 9-1 Business Applications Case The following information relates to The Kroger Company for its 2015 and 2014 fiscal Whole Foods Market, Inc. for its 2014 and 2013 fiscal years THE KROGER COMPANY Selected Financial Information (amounts in millions, except per share amounts) February 1, January 31, 2015 2014 $ 8,911 $8,830 Total current assets 7,951 Merchandise inventory Property and equipment, net of depreciation Total assets Total current liabilities Total long-term liabilities Total liabilities Total shareholders' equity 8,178 17,912 30,556 11,403 13,711 25,114 5,442 108,465 85,512 22,953 16,893 29,281 10,705 13,181 23,886 5,395 98,375 78,138 Revenues Cost of goods sold Gross profit 20,237 3,137 2,725 2,282 1,531 Operating income Earnings from continuing operations before income tax expense 902 1,747 1.75 751 Income tax expense Net earnings Basic earnings per share $ 1.47Explanation / Answer
Kroger company Ratio Whole Foods Market Inc 1 Current Ratio Current Assets/Current Liabilities $8911/11403 0.78 $1756/1257 1.40 Average days to sell inventory 365/Inventory Turnover ratio 365/(85512/((8178+7951)/2) 34.42 days 365/(9150/((441+414)/2) 17.05 days Debt to assets ratio Total Liabilities/Total assets $25114/30556 0.82 $1931/5744 0.34 Return on investment Earnings from continuing operations/Total average assets 2649/((30556+29281)/2) 8.85% 946/((5744+5538)/2) 16.77% Gross Margin percentage Gross Profit/Revenue $22953/108465 21.16% $5044/14194 35.54% Asset turnover Revenue/Total average assets $108465/((30556+29281)/2) 3.63 $14194/((5744+5538)/2) 2.52 Net Margin Earnings from continuing operations/Revenue $2649/108465 2.44% $946/12917 7.32% Plant assets to long term debt ratio Fixed assets/Long term debt $17912/$13711 1.31 $2923/674 4.34 b Company whole foods market Inc appears to be more profitable as the companies gross margin ratio is 35.54% whereas for Kroger company it is 21.16%. Gross margin is calculated by reducing the direct cost of production from the sales. The higher this ratio it means the company is either able to increase its sale or reduce the direct cost associated with production. Since Whole foods has higher gross margin the company is more profitable Company Whole foods market inc net margin is 7.32% which is more than Kroger company net margin which is 2.44%. Net profit is calculated after reducing all the cost for producing and selling the goods from the sale. The higher the ratio the more profitable the company Therefore, based on the above ratios Whole Foods market Inc is more profitable c Debt to assets ratio indicates the financial leverage of the companies. This ratio tells us how much of the assets are financed by liabilities of the company. The higher this ratio represents higher debt by the company to finance assets which indicates higher financial risk Kroger company has higher ratio of 0.82 as compared to Whole foods market inc which has ratio of 0.34. Therefore, Kroger company has higher level of financial risk d The Gross margin ratio is also referred as the company is selling its inventory at higher cost that is the company adds mark up to the sale Gross margin of Whole foods market is 35.54% whereas that of kroger company is 21.16% which means Whole foods market sells goods at higher price e Asset turnover ratio tells us about how efficient the company is in utilising its assets by generating higher revenue. The higher the ratio the more efficient the company is Kroger company has higher asset turnover ratio of 3.63 as compared to Whole foods market, hence kroger company is more efficient in using its assets
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