Financial Health Of The Fresh Market And Kroger

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The purpose of this paper is to compare the financial health of The Fresh Market and Kroger. The Fresh Market and Kroger focus on selling organic food. The Fresh Market is a 1.7 billion corporation compared to Kroger 108 billion. The information was obtained from the 2014 Balance Sheet and Income Statements for both grocery stores. . There are three different categories of ratios; liquidity, profitability and efficiency. Ratios enable one to not focus on the size of the company, but on the liquidity, profitably and efficiency and the overall financial health of the organization. Liquidity Liquidity ratios measure the capability of a business to cover expenses and meet its current and long-term responsibility. These ratios are imperative in order to keep the business alive. Lending institutions are typically unwilling to loan money to a business that finds itself in a cash flow jam, because that is often a sign of poor management. The liquidity is measured with 3 different ratios; current ratio, turnover – of – cash ratio and debt- to equity ratio. The Fresh Market has a current ratio of 1.11 “measures the business’s ability to meet short-term obligations” (Gill, 2009, p. 36). Kroger current ratio comes in at .78. The generally accepted standard is 2x; The Fresh Market while not meeting the generally accepted standard is in a better position than Kroger. Low ratios reflect that the cash is compromised in the short-term. High ratio indicates not enough cash for the plans

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