At a recent board meeting of Bedok Limited, the CEO made the following remark 'When it...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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 2019 $'000 $'000 Revenue 1,393,998 991,284 Cost of sales (1,012,140) (724,426) Gross profit 381,858 266,858 Other income 41,243 8,933 Selling and distribution expenses (7,222) (7,669) Administrative expenses (245,159) (172,787) Other expenses (4,580) (2,752) Operating profit 166,140 92,583 Finance expense Finance income (2,016) (2,014) 984 1,338 165,108 91,907 Profit before tax Tax expense (25,975) (16,152) Profit for the year 139,133 75,755 Statement of Financial Position 2020 2019 $'000 $'000 Property, plant and equipment 340,299 356,189 Inventories 77,911 82,166 Trade and other receivables 19,949 17,981 Cash and cash equivalents 253,901 76,419 Total assets 692,060 532,755 Share capital 235,373 235,373 Reserves (65,522) (66,298) Accumulated profits 205,248 146,285 Equity 375,099 315,360 Deferred tax liabilities 3,615 3,042 Term loan 15,000 0 Lease liabilities 23,129 30,239 Non-current liabilities 41,744 33,281 Trade and other payables 208,089 140,766 Current tax payable 29,754 16,605 Term loan 15,000 0 Lease liabilities 22,374 26,743 Current liabilities 275,217 184,114 Total equity & liabilities 692,060 532,755 Statement of Cash Flows (Extract) 2020 2019 $'000 $'000 274,148 117,322 (16,117) (52,182) (80,549) (75,906) 177,482 (10,766) 76,419 87,185 253,901 76,419 Cash flows from opearting activities Cash flows used in investing 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 (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: (i) Current ratio (ii) Quick ratio (iii) Debt-equity ratio (iv) Times interest earned (v) Inventory days (vi) Receivable days (d) (e) (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 return on equity using the DuPont equation and discuss your observations. (6 marks) 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 2019 $'000 $'000 Revenue 1,393,998 991,284 Cost of sales (1,012,140) (724,426) Gross profit 381,858 266,858 Other income 41,243 8,933 Selling and distribution expenses (7,222) (7,669) Administrative expenses (245,159) (172,787) Other expenses (4,580) (2,752) Operating profit 166,140 92,583 Finance expense Finance income (2,016) (2,014) 984 1,338 165,108 91,907 Profit before tax Tax expense (25,975) (16,152) Profit for the year 139,133 75,755 Statement of Financial Position 2020 2019 $'000 $'000 Property, plant and equipment 340,299 356,189 Inventories 77,911 82,166 Trade and other receivables 19,949 17,981 Cash and cash equivalents 253,901 76,419 Total assets 692,060 532,755 Share capital 235,373 235,373 Reserves (65,522) (66,298) Accumulated profits 205,248 146,285 Equity 375,099 315,360 Deferred tax liabilities 3,615 3,042 Term loan 15,000 0 Lease liabilities 23,129 30,239 Non-current liabilities 41,744 33,281 Trade and other payables 208,089 140,766 Current tax payable 29,754 16,605 Term loan 15,000 0 Lease liabilities 22,374 26,743 Current liabilities 275,217 184,114 Total equity & liabilities 692,060 532,755 Statement of Cash Flows (Extract) 2020 2019 $'000 $'000 274,148 117,322 (16,117) (52,182) (80,549) (75,906) 177,482 (10,766) 76,419 87,185 253,901 76,419 Cash flows from opearting activities Cash flows used in investing 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 (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: (i) Current ratio (ii) Quick ratio (iii) Debt-equity ratio (iv) Times interest earned (v) Inventory days (vi) Receivable days (d) (e) (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 return on equity using the DuPont equation and discuss your observations. (6 marks)
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
A study is conducted to measure children's growth rates without any treatment applied to the children. What best classifies this study? Choose the correct answer below. Experiment O Discrete data O...
-
For a standard normal distribution, find: P(-2.36 < z < 1.59)
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
If you were able to dictate economic policy, how would you strengthen the automatic stabilizers in this country? Why would your solutions work?
-
District Company had the following partially completed payroll register: Requirements 1. Complete the payroll register. 2. Journalize Districts wages expense accrual for the current pay period. 3....
-
Youth Athletic Services (YAS) provides adult supervision for organized youth athletics. It has a president, William Mayes, and five employees. He and one of the other five employees manage all...
-
Stallworth uses the direct write-off method of recording uncollectible accounts expense. Instructions: Journalize the following transactions completed during the current year. Use page 3 of a general...
-
A spreadsheet containing financial statements for Mens Wearhouse, Inc., for fiscal years 20062010 is available for download from McGraw-Hills Connect or your course instructor. MEN'S WEARHOUSE INC....
-
attach a Python module named Robots.py. This module should define two classes, Robot and KillerRobot, with the following behaviors. Make good use of inheritance, method overriding, and super() to en
-
A MODEL OF CLEAN ENERGY ENTREPRENEURSHIP IN AFRICA: E+COS PATH TO SCALE 1. Discuss how the business model of E+Co affected its performance with regards to SRI. 2. Should a firm pursue ESG...
-
For the current year, Maple Corporations book income before federal income tax was $100,000. Included in this $100,000 were the following: Provision for state income tax $1,000 Interest earned on...
-
2) Convert the following signed numbers to decimal by using 2's complement. (a) 01111101 (b) 10000000 (c) 11111111 (d)00000000 (e) 11110101
-
Reddy transfers land (fmv of $55,000 and basis of $15,000) for 45% of RBB Co and $10,000 cash. Bluey transfers a truck (fmv of $45,000 and basis of $50,000) for 45% of RBB Co. Bingo provides services...
-
Martinez Audio Visual Incorporated offers an incentive stock option plan to its regional managers. On January 1 , 2 0 2 4 , options were granted for 8 million $ 1 par common shares. The exercise...
-
Expedition Company worked on five jobs during May: Jobs A10, B20, C30, D40, and E50. At the end of May, the job cost sheets for these five jobs contained the following data: Job A10 Job B20 Job C30...
-
a) Examine FIVE (5) types of economic-related crimes as categorized under the International Classification of Crime for Statistical Purposes (ICCS). b) Contrast FIVE (5) differences between...
-
Heineken N.V., a global brewer based in the Netherlands, reports the following balance sheet accounts for the year ended December 31, 2016 (euros in millions). Prepare the balance sheet for this...
-
What are three cost concepts commonly used in applying the cost-plus approach to product pricing?
-
The variable cost concept used in applying the cost-plus approach to product pricing includes what costs in the cost amount to which the markup is added?
-
Fowler Construction Company is considering selling excess machinery with a book value of \($200,000\) (original cost of \($325,000\) less accumulated depreciation of \($125,000)\) for \($160,000\)...
Study smarter with the SolutionInn App