CASE 8-4 CERTIFIED ORGANIC Whole Foods Market Inc. included these statement

CASE 8-4 CERTIFIED ORGANIC

Whole Foods Market Inc. included these statements in its 2010 annual report.*

WHOLE FOODS MARKET INC.

Consolidated Balance Sheets

(in thousands)

September 26 2010 and September 27 2009

Assets 2010 2009

Current Assets:

Cash and cash equivalents $ 131996 $ 430130

Short-term investments %u2013 available-for-sale securities 329738 %u2014

Restricted cash 86802 71023

Accounts receivable 133346 104731

*%u201CWhole Foods Market is the world%u2019s leading natural and organic foods supermarket and America%u2019s first national

%u201CCertified Organic%u201D grocer.%u201D 10-K

Source: Whole Foods Market Inc. 2010 10-K

Assets 2010 2009

Merchandise inventories $ 323487 $ 310602

Prepaid expenses and other current assets 54686 51137

Deferred income taxes 101464 87757

Total current assets 1161519 1055380

**Property and equipment net of accumulated

depreciation and amortization 1886130 1897853

Long-term investments %u2013 available-for-sale securities 96146 %u2014

Goodwill 665224 658254

Intangible assets net of accumulated amortization 69064 73035

Deferred income taxes 99156 91000

Other assets 9301 7866

Total assets $3986540 $3783388

Liabilities and Shareholders Equity

Current Liabilities:

Current installments of long-term debt and capital

lease obligations $ 410 $ 389

Accounts payable 213212 189597

Accrued payroll bonus and other benefits due team

members 244427 207983

Dividends payable %u2014 8217

Other current liabilities 289823 277838

Total current liabilities 747872 684024

Long-term debt and capital lease obligations less

current installments 508288 738848

Deferred lease liabilities 294291 250326

Other long-term liabilities 62831 69262

Total liabilities 1613282 1742460

Series A redeemable preferred stock $0.10 par value

425 shares authorized; zero and 425 shares issued

and outstanding at 2010 and 2009 respectively %u2014 413052

Shareholders%u2019 equity:

Common stock no par value 300000 shares

authorized; 172033 and 140542 shares issued and

outstanding at 2010 and 2009 respectively 1773897 1283028

Accumulated other comprehensive income (loss) 791 (13367)

Retained earnings 598570 358215

Total shareholders%u2019 equity 2373258 1627876

Commitments and contingencies

Total liabilities and shareholders%u2019 equity $3986540 $3783388

**Property and equipment include construction in progress and equipment not yet in service (2010 %u2013 $120845;

2009 %u2013 $130068)

WHOLE FOODS MARKET INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except per share amounts)

Fiscal years ended September 26 2010 September 27 2009 and September 28 2008

2010 2009 2008

Sales $9005794 $8031620 $7953912

Cost of goods sold and occupancy costs 5870393 5277310 5247207

Gross profit 3135401 2754310 2706705

Direct store expenses 2375716 2145809 2107940

General and administrative expenses 272449 243749 270428

Pre-opening expenses 38044 49218 55554

Relocation store closure and lease termination costs 11217 31185 36545

Operating income 437975 284349 236238

Interest expense (33048) (36856) (36416)

Investment and other income $ 6854 $ 3449 $ 6697

Income before income taxes 411781 250942 206519

Provision for income taxes 165948 104138 91995

Net income 245833 146804 114524

Preferred stock dividends 5478 28050 %u2014

Income available to common shareholders $ 240355 $ 118754 $ 114524

Basic earnings per share $ 1.45 $ 0.85 $ 0.82

Weighted average shares outstanding 166244 140414 139886

Diluted earnings per share $ 1.43 $ 0.85 $ 0.82

Weighted average shares outstanding diluted basis 171710 140414 140011

Dividends declared per common share $ %u2014 $ %u2014 $ 0.60

Required

a. Compute the following for 2010 and 2009:

1. Net profit margin

2. Total asset turnover (use year-end assets)

3. Return on assets (use year-end assets)

4. Operating income margin

5. Return on operating assets (use year-end assets)

6. Sales to fixed assets (use year-end fixed assets)

7. Return on investment (use year-end balance sheet accounts)

8. Return on total equity (use year-end equity)

9. Gross profit margin

b. Comment on the trends in (a).