Question

Whole Foods and Amazon Over the past decade, Whole Foods Market, Inc., has become an increasingly familiar part of the urban landscape. As of November 5, 2014, the company had 401 stores in the United States, Canada, and the United Kingdom. Using financial websites such as finance.yahoo.com and money.msn.com, you can access a wealth of financial information for companies such as Whole Foods. By entering the company’s ticker symbol, WFM, you will be able to access a great deal of useful information, including a summary of what Whole Foods does (Profile), a chart of its recent stock price (Interactive Chart), EPS estimates (Earnings), recent news stories (Headlines), and a list of key financial data and ratios (Key Ratios). In researching a company’s operating performance, a good place to start is the recent stock price performance. From an interactive chart, you can obtain a chart of the company’s stock price performance and compare it to the overall market (as measured by the S&P 500 index) between 2010 and 2015. As you can see, Whole Foods has had its ups and downs. But the company’s overall performance has been quite strong during the past 5 years, and it has beaten the overall market handily. You can also find Whole Foods’ recent financial statements (Financials). Typically, you can find annual balance sheets, income statements, and cash flow statements for 3 to 5 years. Quarterly information is also available. Discussion Questions 1. Looking at the most recent year available, what is the amount of total assets on Whole Foods’ balance sheet? What percentage is fixed assets, such as plant and equipment? What percentage is current assets? How much has the company grown over the years that are shown? 2. Does Whole Foods have very much long-term debt? What are the chief ways in which Whole Foods has financed assets? 3. Looking at the statement of cash flows, what factors can explain the change in the company’s cash position over the last couple of years? 4. Looking at the income statement, what are the company’s most recent sales and net income? Over the past several years, what has been the sales growth rate? What has been the growth rate in net income? 5. Over the past few years, has there been a strong correlation between stock price performance and reported earnings? Explain. (Hint: Change the Interactive Stock Chart so that it corresponds to the same number of years shown for the financial statements.) 6. Why did Amazon buy Whole Foods? What was the value assigned to whole food in this acquisition?

Answer 1

1.

The total assets on Whole Foods Market Inc's balance sheet is $6676 million (as at Sep 24, 2017).

The amount of fixed assets is $3514 million which is 52.64% of total assets.

The amount of current assets is $ 2145 million which is 32.13% of total assets.

In terms of net assets of the company has company has grown by 5.28% [(6676-6341)/6341]

2.

The long term debt of the company is $1081 million which is 33.3% of total debt. Therefore we can say that long term debts are at standard level.

3.

There has been a fall in net income during the last financial year. Also, Whole Foods' purchase of high amounts of available-for-sale securities has led to heavy expenses. There has also been a rise in Other Current Liabilities.

4.

The most recent net income of the company is $245 million..

Sales totaled approximately $16.0 billion, $15.7 billion and $15.4 billion in fiscal years 2017, 2016 and 2015, respectively.

6.

Amazon acquired Whole Foods for $13.7 billion.

It did so because it wanted to gain a chain of physical stores and expand into the territory of selling groceries.