1-4. Chongqing Chang'an Automobile Co. and SAIC Motor Corporation are both listed automobile manufacturers in mainland China. Both firms have domestic brands, and also have both invested in joint ventures with foreign automobile brands. Chang'an and SAIC have the adapted income statement below for year 2016: In billion RMB Chang'an SAIC Sales 78.5 756.4 --COGS (64.5) (650.2) --Selling Expenses (5.3) (47.5) --Administration Expenses (5.1) (28.3) --Interest cost/revenue 0.31 (2.1) --Asset write-down losses (0.47) (3.2) --Other expenses (3.63) (7.3) Investment gains/losses --FV method (0.01) --Equity method for joint ventures 9.56 27.75 --other 0.06 2.82 Non-operating revenue/expenses 0.89 2.1 Pretax income 10.3 50.5 Minus: tax expense (0.07) (6.5) Net Income 10.2 44.0 Required: Evaluate the quality of earnings of the two firms for year 2016 and write down any cautionary notes that you have regarding the income statements