(d) Hypothesize the reason(s) why Bedoks FY 2020 operating profit of $166M is significantly different from cash flows from operating activities of $274M.

(e) Decompose Bedoks FY2020 and 2019 return on equity using the DuPont equation and discuss your observations.

Question 1 At a recent board meeting of Bedok Limited, the CEO made the following remark When it comes to making financial decisions, our primary goal is to increase our market share.' (a) Discuss, in a balanced manner, your views regarding the CEO's remark. (6 marks) Bedok Limited is one of the major supermarket chains in Singapore and is listed on SGX Mainboard. Pioneer Pte. Ltd. is Bedok's competitor, but it is a private company that is closely owned by the Tan family. (b) Examine which company will suffer from the agency problem, and the costs associated (8 marks) The Statement of Profit or Loss and Statement of Financial Position of Bedok for FY 2020 and 2019 are shown below. An extract of the Statement of Cash Flows is also included. Statement of Profit or Loss 2020 $'000 2019 $'000 Reveme Cost of sales Gross profit 1,393,998 (1,012,140) 381,858 991,284 (724,426) 266,858 Other income Selling and distribution expenses Administrative expenses Other expenses Operating profit 41,243 (7,222) (245,159) (4,580) 166,140 8,933 (7,669) (172,787) (2,752) 92,583 Finance expense Fmance income Profit before tax Tax expense Profit for the year (2,016) 984 165,108 (25,975) 139,133 (2,014) 1,338 91,907 (16,152) 75,755 Statement of Financial Position 2020 $'000 2019 $'000 Property, plant and equipment Inventories Trade and other receivables Cash and cash equivalents Total assets 340,299 77,911 19,949 253,901 692,060 356,189 82,166 17,981 76,419 532,755 Share capital Reserves Accumulated profits Equity 235,373 65,522) 205,248 375,099 235,373 (66,298) 146,285 315,360 Deferred tax liabilities Term loan Lease liabilities Non-cutent habilities 3,615 15,000 23,129 41,744 3,042 0 30,239 33,281 Trade and other payables Curent tax payable Term loan Lease liabilities Curent liabilities 208,089 29,754 15,000 22,374 275,217 140,766 16,605 0 26,743 184,114 Total equity & liabilities 692,060 532,755 Statement of Cash Flows (Extract) 2020 $'000 2019 $'000 Cash flows from opearting activities Cash flows used in nivesting activities Cash flows used in financing activities Net increase/(decrease) in cash Cash at the beginning of the year Cash at the end of the year 274,148 (16,117) (80,549) 177,482 76,419 253,901 117,322 (52,182) (75,906) (10,766) 87,185 76,419 (c) Compose a memorandum to the Board analyzing Bedok's liquidity, leverage and asset management ratios for FY 2020 and 2019. In doing so, you should at least include the following ratios: (1) Current ratio (i) Quick ratio (iii) Debt-equity ratio (iv) Times interest earned (v) Inventory days (d) (vi) Receivable days (22 marks) Hypothesize the reason(s) why Bedok's FY 2020 operating profit of $166M is significantly different from cash flows from operating activities of $274M. (Note: Cash flows from operating activities is not in our lecture notes. You might rely on online resource to understand the concept.) (6 marks) Decompose Bedok's FY2020 and 2019 retum on equity using the DuPont equation and discuss your observations (6 marks) (e) Question 1 At a recent board meeting of Bedok Limited, the CEO made the following remark When it comes to making financial decisions, our primary goal is to increase our market share.' (a) Discuss, in a balanced manner, your views regarding the CEO's remark. (6 marks) Bedok Limited is one of the major supermarket chains in Singapore and is listed on SGX Mainboard. Pioneer Pte. Ltd. is Bedok's competitor, but it is a private company that is closely owned by the Tan family. (b) Examine which company will suffer from the agency problem, and the costs associated (8 marks) The Statement of Profit or Loss and Statement of Financial Position of Bedok for FY 2020 and 2019 are shown below. An extract of the Statement of Cash Flows is also included. Statement of Profit or Loss 2020 $'000 2019 $'000 Reveme Cost of sales Gross profit 1,393,998 (1,012,140) 381,858 991,284 (724,426) 266,858 Other income Selling and distribution expenses Administrative expenses Other expenses Operating profit 41,243 (7,222) (245,159) (4,580) 166,140 8,933 (7,669) (172,787) (2,752) 92,583 Finance expense Fmance income Profit before tax Tax expense Profit for the year (2,016) 984 165,108 (25,975) 139,133 (2,014) 1,338 91,907 (16,152) 75,755 Statement of Financial Position 2020 $'000 2019 $'000 Property, plant and equipment Inventories Trade and other receivables Cash and cash equivalents Total assets 340,299 77,911 19,949 253,901 692,060 356,189 82,166 17,981 76,419 532,755 Share capital Reserves Accumulated profits Equity 235,373 65,522) 205,248 375,099 235,373 (66,298) 146,285 315,360 Deferred tax liabilities Term loan Lease liabilities Non-cutent habilities 3,615 15,000 23,129 41,744 3,042 0 30,239 33,281 Trade and other payables Curent tax payable Term loan Lease liabilities Curent liabilities 208,089 29,754 15,000 22,374 275,217 140,766 16,605 0 26,743 184,114 Total equity & liabilities 692,060 532,755 Statement of Cash Flows (Extract) 2020 $'000 2019 $'000 Cash flows from opearting activities Cash flows used in nivesting activities Cash flows used in financing activities Net increase/(decrease) in cash Cash at the beginning of the year Cash at the end of the year 274,148 (16,117) (80,549) 177,482 76,419 253,901 117,322 (52,182) (75,906) (10,766) 87,185 76,419 (c) Compose a memorandum to the Board analyzing Bedok's liquidity, leverage and asset management ratios for FY 2020 and 2019. In doing so, you should at least include the following ratios: (1) Current ratio (i) Quick ratio (iii) Debt-equity ratio (iv) Times interest earned (v) Inventory days (d) (vi) Receivable days (22 marks) Hypothesize the reason(s) why Bedok's FY 2020 operating profit of $166M is significantly different from cash flows from operating activities of $274M. (Note: Cash flows from operating activities is not in our lecture notes. You might rely on online resource to understand the concept.) (6 marks) Decompose Bedok's FY2020 and 2019 retum on equity using the DuPont equation and discuss your observations (6 marks) (e)