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What do the financial ratios in Exhibit 4 tell you about the past operating performance...

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Finance

  1. What do the financial ratios in Exhibit 4 tell you about the past operating performance of Whole Foods? How informative are the historical ratios for Whole Foods prospective performance? Perform a valuation analysis based on the Enterprise Value to EBITDA multiples. Calculate the implied share price = Multiple EBITDA/Shares outstanding]. Explain your results and whether this supports a buy recommendation.Sales Growth 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Whole Foods Market 17% 23% 22% 19% 18% 21% 1% 12% 12% 16% 10% Other natural & organic 8% 13% 14% 41% 25% Conventional grocer 6% 1% 5% 34% 10% 5% -5% 0% 4% -15% -5% Supercenters 8% 7% 11% 12% 7% 7% 0% 5% 8% 7% 3% and wholesalers EBITDA Margins 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Whole Foods Market 9% 9% 8% 8% 7% 6% 7% 8% 8% 9% 9% Other natural & organic 8% 9% 8% 7% 9% 8% Conventional grocer 4% 5% 5% 6% 6% 3% 3% 3% 3% 4% 4% Supercenters and wholesalers 7% 7% 7% 7% 7% 7% 7% 8% 7% 7% 7%

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