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.
Required
a. Compute the following ratios for the companies’ 2014 fiscal years:
(1) Current ratio.
(2) Average days to sell inventory. (Use average inventory.)
(3) 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.
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