Question
As a senior manager, you will be involved in supporting procurement processes, investment decisions, evaluating joint ventures partners for common projects, or even assessing potential
As a senior manager, you will be involved in supporting procurement processes, investment
decisions, evaluating joint ventures partners for common projects, or even assessing
potential business acquisitions as they relate to your divisions operations. All these types of
decisions would require a careful analysis to assess the financial strength, or the position of a
potential supplier, contractor, investment, vendor or partner.
A typical financial management related activity would be to conduct a financial statement
analysis to assess the financial performance and financial position of an organisation your
company may seek to engage with. Financial analysis is most valuable when it considers both
qualitative and quantitative analysis.
In certain circumstances (e.g. selecting suppliers or contractors to fulfil the role of service
providers), it is essential to undertake a comparative analysis of two preferred suppliers /
contractors.
Your tasks
1. Identify two stock exchange listed (public) companies that you are considering as
potential suppliers of goods or services to your company. These companies can be
located anywhere in the world, if they are stock exchange listed (quoted).
2. Access both companies annual financial reports from the Investor relations tabs on
their websites (or from the stock exchange where they are listed).
3. Undertake qualitative and quantitative financial statement analysis by utilising the
following financial ratios as part of your analysis:
a. Profitability ratios
b. Efficiency ratios
c. Liquidity ratios
d. Gearing ratios
4. Perform a comparative analysis of the two companies. Ensure that your comparative
analysis focuses on recommending one of these companies as your preferred
supplier.
5. Prepare a report to your divisional director with your analysis and recommendations
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