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Whole Foods Market Inc.

By Jacob Cohen,  David Hawkins,  Jenifer Raver
Published 01 Oct 2006
Reference 5405
Topic Economics & Finance
Industry Food and Beverages Production
Region North America
Length 11 page(s)
Language English
Inspection copy
6.00
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Summary

This case focuses on Whole Foods Market Inc. and how it accounts for its leases, in particular whether or not it should capitalize its operating leases. The case write-up includes a company history, Whole Foods Market property, and the accounting controversy related to FASB Statement No. 13. The case also includes various exhibits for the user to analyze: Whole Foods stock price graph; various Whole Foods financial statements; Whole Foods footnotes on growth strategy, properties, property and equipment, and leases; and Whole Foods financial highlights.

Teaching objectives

The objective of this case is for the user to better understand lease accounting, specifically the implication of off balance sheet liabilities on a company's financial performance. Also, the user is asked to answer three questions: 1) Is Whole Foods underreporting its liabilities and assets; 2) Should analysts recast the financials by capitalizing the operating leases; and 3) What are the relevant factors to consider when making such decisions?

Keywords
  • RD0906
  • AR0607
  • AR2006
About the authors
Cohen

Jacob Cohen

Visiting Professor of Innovation, Entrepreneurship, and Capital Markets

David  Hawkins

Jenifer  Raver


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