Question

1) Current ratio. 2) Average days to sell inventory. (Use average inventory.) 4] Return on 5) Gross identify which of answer and to c, which company appears to be charging higher prices for its goods? txplain your answer and identify which of the ratio(s) from Part1 rs to have the higher level of financial y appears to be the more efficient at using its assets? which of the ratios) from Part 1you used to reachyour conclusion.

Answer 1

Part-1
Calculation of ratios:
	Particulars	Formula	Kroger Co	Whole foods market
1	Current ratio	Current ratio= Current assets/Current liabilities Kroger= 8911/11408=2.08 Whole foods= 1544/1252= 2.78	0.78	1.23
2	Average days to sell inventory	Average collection period=(Average Inventory*365)/Revenue Average inventory: Kroger= (6933+6801)/2=6867 Whole Foods= (500+441)/2=471 Average collection: Kroger= 6867*365/108665=23.06 Whole foods=471*365/15389=11.17	23.06	11.17
3	Debt to asset	Formula: Total debt/ Total assets Kroger= 25114/30356=0.83 Whole foods=1972/5741=0.34	0.83	0.34
4	Reurn on investment	Earnings*100/ Investment Kroger=2649/5442=48% Whole foods=878/3769=23%	48%	23%
5	Gross margin percentage	Gross profit*100/Revenue Kroger= 22953*100/108665=21.12% Whole foods= 5416*100/15389=35.19%	21.12%	35.19%
6	Asset turnover	Sales/ Total assets Kroger= 108665/30356=3.58 Whole foods= 15389/5741=2.68	3.58	2.68
7	Return on sales	Earnings from contiuing operations/Revenue Kroger= 2649*100/108665=24.38% Whole Foods= 878*100/15389=5.71%	24.38%	5.71%
8	Plant assets to long term debt	Plant-: Kroger=17912 Whole foods=3163 Ratio=: Kroger=17912/13711=1.31 Whole foods=3163/65=48.66	1.31	48.66

Part-2

Written Analysis:

1. Kroger co appears to be more profitable by using Return on Sales ratio of which Kroger co. has higher percentage return of 24.38% as compared to whole foods market inc. which has only 5.71%. Also, return on investment of Kroger co is also high that is 48%.
2. Kroger co. has higher financial risk since, its debt to asset ratio is 0.83 as compared to whole foods market inc which has 0.34.
3. Whole foods market inc is charging higher prices for its goods since its gross margin percentage is higher that is 35.19% as compared to Kroger which has 21.12%.
4. Kroger co. is more efficient in using its assets since its Assets turnover ratio is 3.58 which is higher than Whole foods market which has 2.68.