You are the Purchasing Manager for the business you work for. You are in the process of letting a contract for the supply of an important component used in your business’s production. You have been provided with the financial statements of Benedict Co. who are one of a few companies tendering for the contract. The income statement and statement of financial position have been reproduced below. As well as reviewing the financial statements of Benedict Co. from a potential customer perspective, you are interested in how the company may be viewed by potential investors, lenders and suppliers.
You have also collected the following information about other companies operating in the same sector as Benedict Co.:
We should have a short introductionincluding the purpose of your report.
Your conclusion should include your opinion on the financial position of Benedict Co. and if you would Recommend him as a supplier to Tesco.
Report Structure and presentation is very important.
Harvard Referencing style and In-text citation is required in our assignment.
The number of used resources in our report should be a three as minimum apart from Tesco Annual Report. It’s recommended to have Corporate Finance Essentials book on net by Stephen Ross, R. Westerfield and Jordan as one of your used references. Using many references is a plus and will enhance and enrich the assignment in front of my tutor.
Current ratio 1.6 Quick ratio 1.0
Trade receivable days 55 days Inventory days 60 days
Trade payable days 90 days
Statement of income for Benedict Co. for the year to 31 January
$’000 $ ‘000
Sales 30,800 24,900
Cost of sales 16,000 14,500
Gross profit 14,800 10,400
Admin expenses 1, 700 400
Distribution costs 3,500 800
Finance costs 1,300 500
Profit before taxation 8,300 8, 700
TAXA TION 1, 700 1, 700
Pro it a er taxation 6,600 7,000
Statement of financial position for Benedict Co. as at 31 January 2oX1
$’000 $ ‘000 $ ‘000 $ ‘000
Non-current assets 38,000 32,600
Inventory 5,200 2,600
Trade receivables M w
Total assets 50,800 39,000
Capital and reserves
Share capital 18,000 18,000
Reserves 10,000 7,900
6% bonds 12,000 8,000
Trade payables 6,800 4,300
Overdraft 4,000 800
Dividends of $4.5 million were paid in 2oX1 and $3.6 million in 2oXo. Shares in Benedict
Co. had a market value of $5.60 at 31 January 2oX1 compared to $3.60 in 2oXo.
Benedict Co. has issued 18 million $1 shares.
Prepare a report for your manager which:
1) Using the Annual Report of Tesoo available at the following link:
a) Explains the term “stakeholder and identifies three types of stakeholder of
b) Analyses how the Environmental and Social Review and the Corporate
Governance Report help Tesoo demonstrate its performance in terms of its
corporate and social responsibilities to two of the stakeholders identified in a
2) Analyses and evaluates the financial position of Benedict Co. using a range of
financial ratios to meet the requirements of potential customers, investors, lenders
and suppliers. Your analysis should:
a) Explain the purpose and relevance of the chosen ratios.
b) Include the results for each chosen ratio and reasons for the movement
between the two years.
c) Highlight any aspects of the performance of Benedict Co. which would give
cause for concern.
d) Critically evaluate the application of financial ratios in interpreting and measuring
the performance of a company.
All calculations should be shown in full as an appendix to the report.
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