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Financial Analysis of Whole Foods Market Inc.

1. According to the calculated profitability ratios, Whole Foods Market Inc. has become
considerably less liquid in the past few years. Between 2012 and 2014 the current and
quick ratios were reduced by almost half. This indicates that the companys ability to
payback short- and long-term debts has decreased overtime.
2. Based on the asset-management ratios, several conclusions can be drawn about the
companys ability to affectively manage and allocate its assets. The inventory turnover
ratio displays how many times the company sold and restocked its inventory in a given
period. Whole Foods was able to improve this number over the last two years from 31.28
times per year to 32.19 times per year. The fixed and total asset turnover ratios were also
able to improve over the two-year span. Since Whole Foods did not record any
depreciation on their balance sheet, these values ended up being the same. Both increased
from 2.21 times to 2.47 times. This improvement indicated that the company was able to
more effectively and quickly allocate its total assets. The only asset management ratio
that decreased over the two-year span is the days sales outstanding ratio, however a
decrease in this ratio actually indicates an improvement. This ratio shows that Whole
Foods was able to collect revenue after each sale more quickly. The value improved from
10.26 days in 2012 to 9.41 days in 2014. So, Whole Foods overall ability to manage and
allocate assets did, in fact improve, over the last two years.
3. Between 2012 and 2014 both the revenue and expenses of the company increased,
however, since the revenues increased at a quicker rate than expenses, their net income
increased each year as well. So, each year the company continued to become gradually
more profitable. However, from 2012 to 2014 the profit margin remained the same at
40%, meaning they are taking the same percentage of profits from their sales each year.
4. The DuPont equation allows us to see whether or not the companys return on equity
ratio increased from year to year. In the case of Whole Foods, the ROE ratio did increase
by about 1% between 2013 and 2014. Though not a very significant percentage, it does
indicate that the company went from gaining 14 cents of profit for every dollar of
shareholders equity to 15 cents per dollar of shareholders equity.
Ratio Analysis

Asset Management Analysis


Profitability Analysis
DuPont Analysis