AF210 Accounting And Finance Questions

AF210 Accounting And Finance Questions

This project is designed to familiarize you with the Annual Report and Financial Statements of a company called Whole Foods. The webpage of the company is always a good place to start when you are looking for information. If the stock is publicly traded it usually has a link for investors and sometimes you can find a link there to recent financial statements.

Otherwise, Edgar is the place to find all the filings that a company has made with the SEC. This is the website address:

http://www.sec.gov/edgar.shtml

Follow these steps:

1. Search for company filings then,

2. Search information collected by the SEC by Company or fund name, ticker symbol, etc.

3. Company name Whole Foods Market, Inc. Ticker Symbol WFM

4. Go to the Form 10-K filed with the SEC for the fiscal year ended September 30, 2014 i.e. the one filed with the SEC on Nov 21st, 2014

Please answer the questions in the following pages relating to the 10-K of Whole Foods Market, Inc.

1.(2pt) What is the title of the Form 10-K document (just below the Form 10-K line)?

2.(2pt) Public companies are required to file 10K and 10Q forms. What is the difference between the two?

3.(2pt) What business is Whole Foods’s in?

4.(2pt) What companies do they operate?

5.(4pt) Name four risks that the company faces.

Go the financial statements:

6.(8pt)

a.What is Whole Foods’s Financial Leverage Ratio for 2014?

b.What does this ratio tell us about the amount of debt that is used by the company?

7.(8pt) Make an assessment of the company’s ability to meet its long-term obligations using a couple of tests of solvency.

8.(8pt)

a.What is Whole Foods’s Total Asset Turnover Ratio for 2014?

b.What does this ratio measure? How would you go about determining whether this ratio reflects strong or weak performance for this company?

c.

9.(12pt)

a.What is Whole Foods’s Net Profit Margin for 2014, 2013, and 2012?

2014____________

2013____________

2012____________

b.What does the Net Profit Margin measure?

c.How is Whole Foods’s performance on this measure in 2014 relative to 2013 and 2012 (better or worse)?

10. (16pt)

a.What is Whole Foods’s Return on Equity (ROE) for 2014?

b.What does ROE measure?

c. If you could take a look at another company’s ROE to compare to Whole Foods’s

what company would you choose? Why?

d. Perform an ROE Decomposition Analysis (Du Pont Analysis). What is your interpretation of the behavior of the company’s ROE?

11.(12pts)

a. What is Whole Foods’s current ratio for 2014, 2013, 2012?

2014_____________

2013_____________

2012_____________

b. What does this ratio measure?

c. How is Whole Foods’s 2014 performance on this measure relative to 2013?

12.(12pts)

a. What are Whole Foods’s basic earnings per common share for 2014, 2013, and 2012?

2014_____________

2013_____________

2012_____________

b. Has there been a good or poor trend in this measure? Explain.

c. Calculate the Price-Earnings ratio of the Company as on the last day of the fiscal year. Make an assessment on the stock market’s assessment of the company’s future performance.

13.(8pts)

a. Who is the auditor for Whole Foods’s in 2014?

b. What is the auditor’s opinion about the company’s 2014 consolidated financial statements? To whom the auditor’s report is addressed?

Look in the Notes to the Financial Statements.

14 (2pts). What depreciation method does Whole Foods’s use?

15.(2pts) What inventory costing method does Whole Foods’ use for most of its inventories?

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