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THE CHINESE UNIVERSITY OF HONG KONG

School of Accountancy
ACCT 2111 A, B, & C Introductory Financial Accounting
(First Term, 2014-15)
Group Assignment Annual Report Project (Case)
The objective of this project is to help students pull together various accounting concepts
learned in this course and apply them to real-world business situations. The project is teambased. Students will be organised in small groups of two to five students each. Each group is
required to do online research of two publicly listed companies in Hong Kong and abroad.
Students, expected to work closely together as a team, need to gather background information
and the most recent annual reports of the selected companies. Based on information contained
in the annual reports, students are required to develop a critical analysis of the financial
health of the selected companies.
Instructions to Students
The project report should be clear, concise and coherent. In writing the report, you should
refer to the annual reports of the companies, quoting references from the annual reports with
page numbers where appropriate. Using references from other sources without clear
quotation violates the academic honesty code and is subject to University policy and
regulations (www.cuhk.edu.hk/policy/academichonesty)
The report should be printed on A4 papers. The report should be no more than 10 pages (one
side A4 paper, 12 pt Times Roman or equivalent) plus any exhibits and reference, if any.
There is no correlation between length of the report and points earned. It is important to
answer all questions directly and please identify the question number in your report.
Deadline of the project is at 5:00 p.m. on December 5, 2014 (Friday) via e-mail.
Instructions on how to find an annual report of a listed company
Annual reports can be found in multiple ways. Financial Statements of Hong Kong listed
companies can be obtained from the website of Hong Kong Stock Exchange:
http://www.hkexnews.hk/listedco/listconews/advancedsearch/search_active_main.asp.
Annual reports are usually also available from stock exchange websites in other countries.
In most cases you can also find the annual report of a company from the companys website.
They are usually provided under an About Us, Investor Relation or similar section.
The Two Companies
Imagine your first job after university is with Thirsty Investors Ltd. One of your clients is
considering investing in an international beverage company particularly Vitasoy
International Holdings LTD ( ). Your group has decided that in addition to Vitasoy,
The Coca-Cola Company is also an attractive investment options for your client. Your
responsibility is to conduct extensive research on Vitasoy and also compare the performance
and market potential of Vitasoy [Hong Kong Stock Exchange code: 0345] and Coca-Cola
[New York Stock Exchange code: KO].

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ACCT2111/Annual Report Project
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Part A (30%)
Download and read the most recent annual report for Vitasoy (Fiscal Year 2013/14) and
answer the following questions. Unless otherwise stated, all questions refer to Vitasoy group
and not just the parent company. Remember to cite any direct quotations along with page
number if you choose to take sections from the annual report. Quoting phrases/paragraphs
directly from the annual report is appropriate (with proper citation), but you must
explain/summarize the text in your own words for full credit.
1.

Provide a brief introduction of the company listing its primary businesses and markets
( page or less).

2.

Locate the Chairmans Letter to shareholders. Who is the Chairman of the board for
Vitasoy? Summarize his assessment of the companys performance in the letter including
the positioning for the future? ( page or less).

3.

Locate the Independent Auditors Report.


(a)
Who is Vitasoys Auditor?
(b)
Who is responsible for the preparation of the financial statements?
(c)
What is the Auditors responsibility?
(d)
What is the audit opinion given to Vitasoys 2013/2014 Annual Report? What
does this mean?

4.

Answer the following questions by reading the financial statements and accompanying
notes. If you cant find pertinent information state that fact in your report. For information
separated between the Company and the Group, answer for the Group.
(a)
What is the basis of preparation of the financial statements?
(b)
What are the accounting policies for investment properties? What depreciation
method(s) is (are) used?
(c)
What are the primary categories of revenues that Vitasoy receives?
(d)
How does Vitasoy account for inventories? How are write-downs treated?
(e)
In which geographic segment does Vitasoy receive most of its reportable
segment revenues? How much is the reportable segment revenue for this geographic
segment in 2014? How does this amount compare with 2013?
(f)
What is the largest category of fixed assets recorded by Vitasoy (based on
HK$)? What are the cost, accumulated depreciation, and net book value of these
assets on Vitasoys books at the end of the fiscal year?
(g)
What are the primary types of intangible assets recorded by Vitasoy? What is
the total value of each of these intangible asset types at the end of the fiscal year?
(h)
What was Vitasoys Profit for the year 2013/2014? How much of this is
attributable to the shareholders of Vitasoy? What is the difference in these two
amounts (explain why there is a difference)?
(i)
How much total cash did Vitasoy generate in 2013/2014? What is the largest
category of cash inflow and cash outflow and what were these amounts?

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ACCT2111/Annual Report Project
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Part B (20%)
Compute the financial ratios for Vitasoys 2013/2014 using the consolidated statement of
comprehensive income and the consolidated statement of financial position. Show detailed
calculations. Use the average of account balance for the consolidated group where
appropriate.
A

Ratio/Value
Current Ratio

Quick Ratio

(Trade) Receivable Turnover

Inventory Turnover

Return on Assets

Return on Equity (company)

Debt Ratio

Times-Interest-Earned

Numerator

Denominator

Answer

Occasionally you might need to read the notes to financial statements to find relevant
information. If you cant find the necessary data to compute certain ratio(s) please state that
fact in your report.
Part C (20%)
Find the 2013 annual report of Coca-Cola.
a.
Provide a brief introduction of the company (less than page).
b.

Compute the same ratios (see Part B above) for Coca-Cola for fiscal year 2013.

Part D (30%)
Using the above ratio analyses and other relevant information contained in the annual reports
to evaluate the financial strengths and weaknesses of the two companies related to the
following dimensions:
a.
b.
c.
d.

Cash Conversion
Short-term liquidity
Long-term liquidity
Profitability

Which company would you recommend your client to invest in and why? Overall, which
company is in better financial health? What other factors need to be taken into consideration?
(No more than 1 page.)

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