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Write 2 page essay on the topic Business accounting.Whole Foods Market, Inc.’s current ratio will not allow them to take more debt as compared to previous years. Although, Whole Foods Market, Inc. h
Write 2 page essay on the topic Business accounting.
Whole Foods Market, Inc.’s current ratio will not allow them to take more debt as compared to previous years. Although, Whole Foods Market, Inc. has made short-term investments but still there is no significant impact on the current ratio. The overall condition of current ratio reveals the fact that the current ratio which is not pretty stable and healthy as compared to the industry practice.
Quick Ratio: Whole Foods Market, Inc. quick ratio is lower than the industry average. The reason behind this is the improper working capital management which makes the quick ratio more tentative in the last three years. The overall signal of Whole Foods Market, Inc. liquidity is not good and it sends a negative signal towards the debt holders and also on the debt market. Moreover, the liquidity crunch problem makes the performance of Whole Foods Market, Inc. slightly vulnerable.
Debt to Equity: Dependency on debt financing is not a bad habit but it has consequences if you rely on more. Whole Foods Market, Inc. debt to equity ratio is lower in comparison with the previous year. The factors of business volume, Inc.rement in sales, fulfilment to pay the suppliers and acquisitions of fixed asset. Due to the expansion in business, Whole Foods Market, Inc. has plenty of financial obligations, most of which has been acquired through debt. In 2008, Whole Foods Market, Inc. reliance more on debt financing as compare to the previous years.
Interest Coverage Ratio (TIE): This ratio suggests the fact that TIE ratio is higher in comparison with the industry because of company entertain its business with high proportion of debt financing. Although the company’s management runs business successfully and this is shown in the EBIT which suggest that the Company is keep improving in the EBIT year by year. In comparison with the ability of paying interest expense is fine in comparison with he industry