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Question 8 12 pts 2. (12 points) Below are several financial statement items for fiscal year 2020 for two grocery chains, Whole Foods Market, an upscale organic grocer, and The Kroger Co. a mainstream grocer. ($ millions) ($ millions) Whole Foods Market The Kroger Co. Net income $ 507 $ 1,957 Sales 15,724 115,337 Average assets 6,041 35.201 Average stockholders' equity 3,497 6,754 1. Calculate each company's return on assets (ROA) and return on equity (ROE). Comment on any differences you observe. 2. Disaggregate the ROA for each company into profit margin (PM) and asset turnover (AT). Explain why Whole Foods has a higher ROA, is it because of PM or AT or both? Question 9 14 pts 3. (16 points) Record the following transactions for Mouser Pet Foods, Inc., in the financial statements effects template below (in thousands). 1. Sell stock in company for $78,000 2. Obtain long-term bank loan of $30,000. 3. Purchase manufacturing equipment for $20,400 cash. 4. Rent manufacturing and warehousing space and pay $34,800 in advance for the year. 5. Purchase $30,000 of inventory, paying $6,000 in cash and the remaining amount on credit. 6. Sell half of the inventory purchased in Transaction e for $33,900 on account. 7. Pay $24,000 to creditors. 8. Make loan payment of $4,800 of which interest is $480 and the rest is principal. Income Statement ($ thousands) Balance Sheet Liabil- Earned Rev. Net Cash Transaction Asset + Noncash = Assets + Contrib. + Capital Expen- ses ities Capital enues Income a) b) c) d) e) f) h)

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