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Whole Foods Pest Analysis Paper

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As mentioned in the text, Whole Foods has experienced some changes in profitability. To be able to trace the profitability trend, a profitability table was composed (Table 2). The table consists of the most important profitability ratios as gross margin, return on assets, return on equity, return on invested capital. Growth as a very important ratio was also analyzed on a yearly basis, 3, 5 and 10-year basis. Gross margin is the profit that comes from the generated sale (Kesavan, Gaur, & Raman, 2010). Gross margin profit can be positive and negative and shows trends in company’s earnings. Positive gross margin indicates growth of company’s earnings. Gross margin from 2007 until now had a continuous trend, with the highest value in 2013. The lowest value the company had in 2008 and now, 34.03 and 34.08 respectively. This is the …show more content…

This value is calculated by comparing net income with the average total assets and should be higher. The lowest value was identified in 2009, and the highest in 2014. In the past 12 months, this value was 6.24% and showing a decreasing trend. Return on equity ratio shows how much did the shareholders earn by investing in the company (Easton, Taylor, Shroff, & Sougiannis, 2002). To show good profitability, this value should be higher. In the case of Whole Foods, the last 12 months show a decrease of return on equity ratio from 14.5% in 2016 to 12.1% in 2017. The return on invested capital ratio shows the ability of a company to generate results by using the available capital (Damodaran, 2007). This value is considered a good profitability indicator since it shows the ability of a company to make profits by using total capital the company owns. Return on invested capital has also a decreasing trend, with the value of 9.88% in the last 12 months. This is a very good indicator of bad profitability the company has right

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