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