A Comparative Analysis of the Grocery Chains: Whole Foods Market and Kroger Co.

4229 Words Sep 6th, 2012 17 Pages
A Comparative Analysis of the Grocery Chains: Whole Foods Market and Kroger Co.
Liz Broxton
Sharon Neely
Joyce White
Columbia College

Abstract
The purpose of this paper is to conduct a comparative analysis of two grocery chains, Whole Foods Market and Kroger Co. Research material obtained from each company will allow judgments to be made concerning potential investment decisions. This study will focus on financial statements such as the income statements, balance sheets and cash flows from each company over the past three years that allow investors the needed insight about a company’s performance. In addition to these areas, we will be looking at opportunities, and trends within the market that are also useful in
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Excluding these impairments charges for 2010 and 2009, adjusted net earnings for both 2010 and 2009 would have been $1.1 billion (p. 12).
In addition to this, the company had a lower interest expense, “resulted from lower retail fuel margins and decreased operating profit” (AnnualReports.com, 2010, p. 12). For an investor the areas within the income statement help determine healthy investments. A company that maintains a healthy sales growth demonstrates a good investment, however they must also look at the quality of earnings and an income statement is not the only financial statement that will allow for a full disclosure. Within Kroger’s income statement there were noted segments attributed from unusual items. These unusual items can distort the evaluations therefore investors must also measure operating and pretax income. It is also wise for the investor to view previous years and conduct comparisons of other organizations. Return on assets (ROA) and return on equity (ROE) are also good indicators of a company’s performance and profitability. Here we look at how well a company utilizes its assets and how it manages shareholders investments. A ROE percentage that is higher than 15% generally are considered sound investments. However overall investors must look for “conservative accounting policies, substantive sales growth, consistent and/or improving profit margins,

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