Strategic Financial Management

You have recently attended a workshop aimed at improving your understanding of
company Annual Reports using Tesco’s report as an example.
During the workshop you looked at the following sections of Tesco’s annual report:
 The Strategic Report including the Environmental and Social Review,
 The Corporate Governance Report and,
 The Group Statements of: ‘Income’ (also sometimes referred to as the Statement
of Profit and Loss) ‘Balance Sheet’ and ‘Cash-Flows’.
You learned about how different ‘stakeholders’ may use the information contained in
these reports and financial statements. You also learned about financial ratios and how
these can be used to interpret and assess the performance of a business in terms of its
profitability, liquidity, efficiency and return to investors.
The timing of the workshop was very fortuitous. 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.:
Current ratio 1.6 Quick ratio 1.0
Trade receivable days 55 days Inventory days 60 days
Trade payable days 90 days