Question

Analyzing, Forecasting, and Interpreting Income Statement and Balance Sheet
Following are the income statement and balance sheet of Whole Foods Market, Inc.

Income Statement, For Years Ended (in $ 000s)	2010	2009
Sales	$ 9,005,794	$ 8,031,620
Cost of goods sold and occupancy costs	5,870,393	5,277,310
Gross profit	3,135,401	2,754,310
Direct store expenses	2,375,716	2,145,809
General administrative expenses	272,449	243,749
Pre-opening expenses	38,044	49,218
Relocation, store closures and lease termination costs	11,217	31,185
Operating income	437,975	284,349
Interest expense	(33,048)	(36,856)
Investment and other income	6,854	3,449
Income before income taxes	411,781	250,942
Provision for income taxes	165,948	104,138
Net income	$ 245,833	$ 146,804

Balance Sheet,($ 000s)	2010	2009
Assets
Cash and cash equivalents	$ 131,996	$ 430,130
Short-term investments-available-for-sale securities	329,738	--
Restricted cash	86,802	71,023
Accounts receivable	133,346	104,731
Merchandise inventories	323,487	310,602
Prepaid expenses and other current assets	54,686	51,137
Deferred income taxes	101,464	87,757
Total current assets	1,161,519	1,055,380
Property and equipment, net of accum depr and amortization	1,886,130	1,897,853
Long-term investments--available-for-sale securities	96,146	--
Goodwill	665,224	658,254
Intangible assets, net of accumulated amortization	69,064	73,035
Deferred income taxes	99,156	91,000
Other assets	9,301	7,866
Total assets	$ 3,986,540	$ 3,783,388
Liabilities and shareholders' equity
Current installments of long-term debt and capital lease obligations	$ 410	$ 389
Accounts payable	213,212	189,597
Accrued payroll, bonus and other benefits due team members	244,427	207,983
Dividends payable	--	8,217
Other current liabilities	289,823	277,838
Total current liabilities	747,872	684,024
Long-term debt and capital lease obligations, less current installments	508,288	738,848
Deferred lease liabilities	294,291	250,326
Other long-term liabilities	62,831	69,262
Total liabilities	1,613,282	1,742,460
Series A redeemable preferred stock; $0.01 par value	--	413,052
Shareholders' equity:
Common stock, no par value	1,773,897	1,283,028
Accumulated other comprehensive income	791	(13,367)
Retained earnings	598,570	358,215
Total shareholders' equity	2,373,258	1,627,876
Total liabilities and shareholders' equity	$ 3,986,540	$ 3,783,388

Forecast Whole Foods Market's 2011 income statement using the following relations (assume "no change" for accounts not listed). ($ 000s)

Sales growth	10.0%
Cost of good sold and occupancy costs/Sales	65.2%
Direct store expenses/Sales	26.4%
General and administrative expenses/Sales	3.0%
Pre-opening expenses/Sales	0.4%
Relocation, store closures and lease termination costs	$--
Interest expense	$33,048
Investment and other income	$6,854
Provision for income taxes/Pretax income	40.3%

• Round answers to the nearest whole number.

• Do not use negative signs with your answers.

Whole Foods Market, Inc. Income Statement, For Years Ended ($ 000s)	2011 Estimated
Sales	Answer
Cost of goods sold and occupancy costs	Answer
Gross profit	Answer
Direct store expenses	Answer
General and administrative expenses	Answer
Pre-opening expenses	Answer
Relocation, store closures and lease termination costs	Answer
Operating income	Answer
Interest expense	Answer
Investment and other income	Answer
Income before income taxes	Answer
Provision for income taxes	Answer
Net income	Answer

Forecast Whole Foods Market's 2014 balance sheet using the following relations (assume "no change" for accounts not listed). ($ 000s)

Restricted cash	$86,802
Short-term investments-available-for-sale securities	$329,738
Accounts receivable/Sales	1.5%
Merchandise inventories/Sales	3.6%
Prepaid expenses and other current assets/Sales	0.6%
Deferred income taxes (current)	$101,464
Long-term investments--available-for-sales securities	$96,146
Goodwill	$665,224
Intangible assets, net of accumulated amortization	$69,064
Deferred income taxes (noncurrent)	$99,156
Other Assets/Sales	0.1%
Current installments of long-term debt and capital lease obligations	$410
Accounts payable/Sales	2.4%
Accrued payroll, bonus and other benefits due team members/Sales	2.7%
Other current liabilities/Sales	3.2%
Deferred lease liabilities	$294,291
Other long-term liabilities/Sales	0.7%
Series A redeemable preferred stock	$--
Common stock	$1,773,897
Accumulated other comprehensive income	$791
Capital expenditures/Prior year net PPE	13.5%
Depreciation & amortization/Prior year net PPE	14.5%
Dividends/Net income	3.5%

• Round answers to the nearest whole number.

Whole Foods Market, Inc. Balance Sheet, ($000s)	2011 Estimated
Assets
Cash and cash equivalents	Answer
Short-term investments-available-for-sale securities	Answer
Restricted cash	Answer
Accounts receivable	Answer
Merchandise inventories	Answer
Prepaid expenses and other current assets	Answer
Deferred income taxes	Answer
Total current assets	Answer
Property and equipment, net of accum depr and amortization	Answer
Long-term investments--available-for-sale securities	Answer
Goodwill	Answer
Intangible assets, net of accumulated amortization	Answer
Deferred income taxes	Answer
Other assets	Answer
Total assets	Answer
Liabilities and shareholders' equity
Current installments of long-term debt and capital lease obligations	Answer
Accounts payable	Answer
Accrued payroll, bonus and other benefits due team members	Answer
Dividends payable	Answer
Other current liabilities	Answer
Total current liabilities	Answer
Long-term debt and capital lease obligations, less current installments	Answer
Deferred lease liabilities	Answer
Other long-term liabilities	Answer
Total liabilities	Answer
Series A redeemable preferred stock, $0.01 par value	Answer
Shareholders' equity:
Common stock, no par value	Answer
Accumulated other comprehensive income	Answer
Retained earnings	Answer
Total shareholders' equity	Answer
Total liabilities and shareholders' equity	Answer

Answer 1

Answer:

Income Statement for Year ended	2011 E	Formulas for reference
Sales	9,906,373	=9005794*(1+10%)
Cost of goods sold and occupancy costs	6,458,955	=9906373*65.2%
Gross Profit	3,447,418	=9906373-6458955
Direct store exp	2,615,282	=9906373*26.4%
G&A Exp	297,191	=9906373*3%
Pre-opening exp	39,625	=9906373*0.4%
relocation store closures and leas termination costs	0
Operating Income	495,319	=3447418-(2615282+297191+39625)
Interest Exp	33,048
Investment and other income	6,854
Income before income tax	469,125	=495319-33048+6854
Provision for income taxes	189,057	=469125*40.3%
Net Income	280,067	=469125-189057

Whole foods Market Inc Balance Sheet
Assets	2011 E
Cash and cash Balance	459,013
Short term Investment available for sale securitites	329,738
Restricted Cash	86,802
Accounts Receivable	148,596	=9906373*1.5%
Merchandise Inventories	356,629	=9906373*3.6%
Prepaid Exp and Other Current Assets	59,438	=9906373*0.6%
Deferred Income Taxes	101,464
Total Current Assets	1,541,680
Property And Equipment Net of Dept	1,612,641	=1886130*(1-14.5%)
Long Term Investment Available for Sale Securities	96,146
Goodwill	665,224
Intangible Assets of Acc Amount	69,064
Deferred Income Taxes non current	99,156
Other Assets	9,906	=9906373*0.1%
Total Assets	4,093,818
Liability and Shareholders Equity
Current Installment of long term debt and capital lease obligation	410
Accounts payable	237,753	=9906373*2.4%
Accured payroll bonus and other benefit	267,472	=9906373*2.7%
Dividends payable	9,802	=280067*3.5%
Other current liabilities	317,004	=9906373*3.2%
Total Current Liabilities	832,441
Long term debt capital lease obligation less current installment	254,218	=(1886130*13.5%)-410
Deferred lease liability	294,291
Other long term liabilities	69,345	=9906373*0.7%
Total Liabilities	1,450,295
Series a redemable P Stocks
Shareholders Equity
Common Stock No par value	1,773,897
Accumulated Other Comprehnsive Income	791
Retained Earnings	868,835
Total Shareholders Equity	26,43,523
Total Liabilities and Shareholders Equity	4,093,818