Swot Analysis : Whole Foods Market

1420 Words6 Pages
Introduction Analyst, investors, and managers use complied information from several financial statements to compare the relative weaknesses and strengths of organizations. The use of ratios assist in linking the balance sheet, cash flow statement, and income statement to perform quantitative analysis. The ratios used by an organization differ dependent on the type of products or services offered. Choosing the correct ratio is essential in planning because certain ratios will assist in achieving the organization’s mission while others have no validity(1). Goals of an organization require effective financial management and effective planning. Ratios are tools used by organizations to discover trends and provide indicators that will measure…show more content…
Cash $8 $1 Marketable securities $5/8 $2/5 Accounts receivable $10/13 $2/5 Inventories $10/13 $5/8 Current assets (a) $30/33 $10/13 Plant & equipment (b) $25/28 $65/68 Intangible assets (c) $20/23 $0/3 Total assets (a + b + c) $75/84 $75/84 Current liabilities* (d) $10/13 $25/28 Long-term debt (e) $50/53 $10/13 Total liabilities (d + e) $60/66 $35/38 Shareholders’ equity $15/18 $40/43 Whole Foods Current ratio = $33/ $13 = 2.54 Quick ratio = ($33 – $13) / $13 = 1.54 Debt to equity = $53 / $18 = 2.94 Debt to assets = $53 / $84 = 0.63 Kroger Current ratio = $13 / $28 = 0.46 Quick ratio = ($13 – $8) / $28 = 0.18 Debt to equity = $13 / $43 = 0.30 Debt to assets = $13 / $74 = 0.18 We can draw a number of conclusions about the financial condition of these two companies from these ratios. Whole Foods Market Inc. has a high degree of liquidity. Based on its current ratio, it has $2.54 of current assets for every dollar of current liabilities. The quick ratio reveals a safe level of liquidity even excluding its inventory, with $1.54 in assets that can be converted rapidly to cash for every dollar of current liabilities. Solvency ratios are high and lessen financial leverage (5). The overall debt is three times equity, and 2/3 of assets are purchased on credit. Nearly half of noncurrent assist are intangible. Debt to tangible asset Ratio ($53/$61) – is 0.87, which means that over 85% of tangible assets are purchased on credit. To summarize, Whole Foods has an adequate

More about Swot Analysis : Whole Foods Market

Open Document