Whole Foods Financial Analysis Essay

An organization’s current ratio shows how liquid the assets of the agency are by comparison to the short term debts that the agency must pay to continue its operations. This ratio is calculated by taking the assets that can be converted to cash within a year (current assets) and dividing it by the liabilities that are either currently due or will become due within a year (current liabilities). The current ratio, ideally, should be at

This ratio indicates a company’s liquidity. It depicts how many dollars of current assets exist for every dollar in current liabilities. The ratio is the higher, the better. Home Depot and Lowe’s has increasing current ratio while Home Depot has a slightly higher one.

The ratios in this report are going to be used to compare WF to its competitior and also to compare its financial performances to the whole Grocery store industry (SIC: 5411) to see how Whole Foods Inc is doing in regards to the whole industry. It is crucial to compare a company’s ratios with the industry’s, because they may appear good or bad when comparing with the company’s competitors, however, when comparing these ratios to the industry a different

[6] See Appendix B for more about the Whole Foods Foundation. As a result of the green movement, Whole Foods has added the 3R’s to their green mission: Reduce, Reuse, Recycle.[7] See Appendix C for more about the Whole Foods green movement.

While the foods retail industry is highly competitive, Whole Foods has established a reputation and maintains a brand loyalty with its customers. Increased rivalry will occur in the larger grocery chains like Wal-Mart and Kroger, because of their flexibility in the products they can offer, and the pressures they can put on the sales growth and overall profits of Whole Foods. They have a larger cash and customer base, and the ability to better advertise their products, while Whole Foods still generates most of their

6. How well is Whole Food Market performing from a strategic perspective? Does Whole Food enjoy a competitive advantage over its 3 chief rivals – Wild Oats, Fresh Market and Trader Joe’s? Does the company have a winning strategy? (points 15)

The annual report provides important company and financial information to investors, customers, employees, and the public. A company's balance sheet displays a company's assets, liabilities, and equity. Running a company involves continual examination and evaluation of its performance. Ensuring the continued profitability of an enterprise, the use of financial ratios is vital to analyze. Utilizing this data, I evaluated Nike Inc., Dicks' Sporting Goods, and Costco's annual reports. I focused on the balance sheets for 2016, to calculate the working capital, current ratio, and quick ratios in an effort to determine their liquidity. Also does my analysis coincide with the company's Management Discussion and Analysis (MD&A).

If we talk about Kroger Co, we can easily say that the gross margin of Kroger was 21% which is 14 % lower as compared to Whole Foods Market. Kroger carries 2700 products under the Simple Truth brand which clearly states that they are also simply entering in the organic food market and can be a possible competitor of Whole Food.

Liquidity ratios measure how well a company is able to meet its short term obligations without relying on selling inventory (David, Fred). Starbucks three main components in these current categories are cash, inventory and accrued liabilities. The current ratio indicates that if Starbucks needed to liquidate they would be able to cover their current liabilities. They would be unable to meet their outside obligations without selling off inventory to

The grocery industry is highly fragmented, with a multitude of strong regional players (Safeway, Publix, Kroeger, Wegmans, etc.). The largest grocery retailer in the United States is Wal-Mart, with an estimated 33% share. Other major retailers are targeting this segment of the industry, focused on a relatively narrow selection of key commodity foods at relatively low prices (Forbes, 2011). Whole Foods competes in a segment occupied by differentiated grocery players including Trader Joe's, Fresh Market and a highly fragmented selection of local and regional upscale and health-conscious grocery stores. The big players in the industry usually carry ranges of organic and natural products as well, siphoning off some business from Whole Foods. As Whole Foods grows, it comes into competition with mainstream grocery retailers more frequently (McLaughlin & Martin, 2009).

To calculate the current ratio, which is one of the most popular liquidity ratios you divide all of firms current assets by all of its current liabilities. McDonalds has $1,819.3 (*everything is in millions for McDonalds) of current assets and $2,248.3 in current liabilities making the firms current ratio .81. In 2005 Wendys has current assets of $266,353 and current liabilities of $296,687 making their current ratio .90. Current ratios are used to represent good liquidity and financial health. Since current ratios vary from industry to industry, the industry average determines if a firms current ratio is up to par, strength or a weakness. In any event if the current ratio is less than the industry average than an analyst or individual interested in investing might wonder why the firm isn't

The current ratio is a liquidity calculation meant to measure a business’s capability to pay short-term obligations. This calculation is derived from company's total current assets divided by its total current liabilities. Steve Madden’s current ratio for the quarter ending in June of 2016 equaled 2.47. 2.47 would generally indicate that Steve Madden shows good short-term financial strength. Over the past 13 years, Steve Madden’s highest current ratio was 12.03 and its lowest was 2.03. Over that time frame its median current ratio was 4.83. Guess’s current ratio for the quarter ending in April of 2016 equaled 3.21. 3.21 would generally indicate that Guess may not be efficiently using its short-term financing facilities or its current assets.

Wal-Mart Stores, Inc. operates retail stores in various formats around the world and is committed to saving people money, so they can live better. Walmart earns the trust of the customers every day by providing a broad assortment of quality merchandise and services at everyday low prices, while fostering a culture that rewards and embraces mutual respect, integrity, and diversity. Walmart’s focus for Sam’s Club is to provide exceptional value on brand name merchandise at “members only” prices for both business and personal use. Industry Retail- Supermarket Current share price $53.480 52

Liquidity In analyzing liquidity of the company, the current ratio is not very telling of a falling company. The company increased its ratio throughout the period of the income statement thus building upon its company assets and allowing for a 6-1 ratio of assets over its liabilities. This implies the company is still able to operate sufficiently even though it did not make its optimum current ratio of about 8-1. However, when one takes the inventory out of the equation with the quick ratio, the numbers show the true strength of short term liquidity. The numbers are still good, and do not indicate failure – but are

Current Ratio is the relationship between a company’s current assets and current liabilities. This form of liquidity ratio also shows if the company can pay its current liabilities. A company’s current ratio can be formulated by dividing the current assets by the current liabilities. In 2016, Starbucks had a ratio of 1.05, which shows that the company has 5% cash and assets that could cover all current liabilities, thus it should not have any problems paying its current liabilities.