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 ratio1.6Quick ratio1.0 Trade receivable days 55 daysInventory days60 daysTrade payable days90 days

Statement of income for Benedict Co. for the year to 31 January20X1 20X0$'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 TAXATION 1,700 1,700 Profit after taxation6,6007,000

Statement of financial position for Benedict Co. as at 31 January 20X120X1 20X0$'000 $'000 $'000 $'000 Non-current assets 38,000 32,600 Current assetsInventory 5,200 2,600Trade receivables 7,600 3,80012,800 6,400 Total assets 50,800 39,000Capital and reservesShare capital 18,000 18,000 Reserves 10,000 7,90028,000 25,900 Non-current liabilities6% bonds 12,000 8,000Current liabilitiesTrade payables 6,800 4,300Overdraft 4,000 80010,800 5,10050,80039,000

Dividends of $4.5 million were paid in 20X1 and $3.6 million in 20X0. Shares in Benedict Co. had a market value of $5.60 at 31 January 20X1 compared to $3.60 in 20X0. Benedict Co. has issued 18 million $1 shares.

Required: Prepare a report for your manager which:

1) Using the Annual Report of Tesco available at the following link:

https://www.tescoplc.com/media/264194/annual-report-2016.pdf

a) Explains the term 'stakeholder' and identifies three types of stakeholder ofTesco.15%

b) Analyses how the Environmental and Social Review and the Corporate Governance Report help Tesco demonstrate its performance in terms of its corporate and social responsibilities to two of the stakeholders identified in a) above.35%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.40%Marks are available for the presentation of your report including structure, style and the presentation of referencing.10%Total100