Analysis Of The Service Sector : Inventory Turnover, Sales Per Square Foot And Current Ratio

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Financial Analysis Ratios and Competitor, First we will take a look at three key metrics of the service sector: Inventory Turnover, Sales per Square Foot and Current Ratio, these are vital components, especially in the retail sector. Whole Foods is number one in the competition of natural products stores. Dominates the niche market of organic and natural foods and has a slightly different demographic... However, this analysis can help project where Whole Foods Market Inc. fits in among the other large-chain grocery stores. Following the above three metrics are three more basic financial analysis ratios, Price-to-Earnings Ratio (P/E), Free Cash Flow and Profit Margin. These metrics will aid in further measuring Whole Foods Market…show more content…
This indicates that they are very effectively moving product in and out of their stores, optimizing their revenue generating potential, whereas all of their competitors are below the industry average over the last two years. The next metric is Sales per Square Foot and is one of the most common ratios used in retail, especially the grocery business. This requires the calculation of a stores ability to maximize their selling space obtained by dividing the aggregate sales of all their locations by the total square footage of all their stores (Retail Owners Institute). Once again, Whole Foods is well ahead of both the industry average and their competitors with an astonishing $874 million per square foot, almost 75% above the industry average of approximately $500 million. All of the others competitors we analyzed exceed this average as well; however none come close to Whole Foods. Next, we looked at the Current Ratio, a liquidity ratio calculated by dividing a company’s total current assets by their total current liabilities. This ratio gives an investor insight into whether or not a company is able to meet its short-term debt obligations and be able to remain a viable organization (Brigham & Houston 87). Again Whole Foods with a Current Ratio of 1.9 times assets to debt exceeds the industry average of 1.4 and is ahead of each of the competitors we looked at as well. This tells prospective investors that the financial health of

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