5. Read the financial statements and relevant footnotes of China Evergrande Group for the year 2020 and answer the following questions:

(1) Calculate the following ratios: (a) current ratio; (b) current cash debt coverage; (c) debt to assets ratio; (d) cash debt coverage; (e) times interest earned. (15 points)

(2) What are the major sources of financing (i.e. where does the company get its cash)? (2 points)

(3) What is the amount of senior notes included in non-current liabilities? What is the amount of convertible bonds included in current liabilities? (2 points)

(4) What are the balances of trade payables, accrued expenses and payroll payable? (3 points)

.

Consolidated Income Statement Year ended 31 December 2020 2019 RMB million RMB million Note Revenue Cost of sales 6 30 507,248 (384,643) 477,561 (344,624) 9 Gross profit Fair value gains on investment properties, net Impairment losses on financial assets Other (losses) gains, net Other income Selling and marketing costs Administrative expenses Other operating expenses 28 29 30 30 30 122,605 1,278 (288) (5,051) 10,253 (31,962) (21,064) (6,059) 132,937 1,516 (194) 1,729 6,997 (23,287) (19,811) (5,037) 69,712 94,850 15 (1,379) 2,967 Operating profit Share of (losses)/profits of investments accounted for using equity method Fair value losses on financial assets at fair value through profit or loss Fair value gains on derivative financial liabilities Finance costs, net (1,863) 17 23(c) 32 (31) 2,183 (2,240) 981 (22,763) Profit before income tax 68,245 74,172 Income tax expenses 33 (36,845) (40,630) Profit for the year 31,400 33,542 Consolidated Balance Sheet 31 December 2020 RMB million 31 December 2019 RMB million Note ASSETS Non-current assets Property, plant and equipment Right-of-uso assots Investment properties Goodwill Intangible assets Trade and other receivables Prepayments Investments accounted for using equity method Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Doforred income tax assets 7 8 9 10 11 13 14 15 16 17 25 75,731 18,561 165,850 7,822 10,696 7,240 2,461 92,270 1,412 8.230 5,943 55,798 13,553 162.556 7.788 7.960 6.332 2,697 87,811 1,587 8.005 5,676 396,225 359,763 QQu 12 12 13 Current assets Inventories Properties under development Completed proportios hold for sale Trade and other receivables Contract acquisition costs Prepayments Income tax rocovorable Financial assets at fair value through profit or loss Restricted cash Cash and cash equivalents 358 1,257,906 148,473 141,706 5,190 151,026 16,334 3,195 21,992 158,752 574 1,198,388 129,073 143,706 2.757 130,461 12, 167 921 78.711 150,056 14 17 19 20 1,904,934 1,846,814 Total assets 2,301,150 2. 206,577 EQUITY Capital and reserves attributable to shareholders of the Company Share capital and premium Other reserves Retained earnings 21 22 4,635 92,786 49,480 1,575 66,133 77,992 146,901 203,530 145,700 212.837 Non-controlling interests 40 Total equity 350,431 358,537 381,055 LIABILITIES Non-current liabilities Borrowings Derivative financial liabilities Deferred income tax liabilities Other payables 23 24 25 26 427,726 4,666 60,766 4,847 53,142 9,278 443,475 498,005 Current liabilities Borrowings Trade and other payables Contract liabilities Current income tax liabilities 23 26 335,477 829,174 185,746 156,856 372,169 717,618 129,706 130,543 27 1,507,253 1,350,035 Total liabilities 1,950,728 1,848,040 Total equity and liabilities 2,301,150 2,206,577 Consolidated Statement of Cash Flows Year ended 31 December 2020 2019 RMB million RMB million Note 36 Cash flows of operating activities Net cash generated from operations Income tax paid Interest paid 213,231 (25,134) (78,034) 18,493 (19,050) (66,791) Net cash generated from/(used in operating activities 110,063 (67,357 41 (4,052 (12,714) (12,376) (11,838) 25 5,611 (1,227) (4,703) (1,836) (4,161) Cash flows of investing activities Acquisition of subsidiaries, net of cash acquired Purchases of property, plant and equipment and investment properties Proceeds from disposal of property, plant and equipment, land use rights and intangible assets Proceeds from disposal of investment properties Purchase of land usor rights Purchase of intangible assets Investment in associates Investment in joint ventures Proceeds from disposal of joint ventures and associates Not cash roceived from disposal of subsidiaries Dividend received Purchase of financial assets at far value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Repayment from associates Repayment from joint ventures Repayment from non-controlling interests Cash advance to associates Cash advance to joint ventures Cash advance to non-controlling interests Prepayments for acquisition of subsidiaries Interest received Procoods from governments grant for construction 423 3,378 (2,056) (1,269) (16,133 (4.405) 1,895 898 182 (7,925) 244 64 (6,628) 17 17 7,372 4,098 15 8,713 6,960 (1,400) (13,395) (5,630) (374) 4,820 1,194 11,041 4,745 (30) (19,986) (12,112 (2.169) 3,844 1,551 Not cash used in investing activities (24,128) (55,308 36b) 36b) 36b) 365) 365) 36b) 365) 303,454 (398,484) 16,809 (17,125) 47,018 (24,487) (1,514 462,121 (407,323) 19,933 (18,544) 52,708 (697) (4,181) 3,720 77 Cash flows of financing activities Proceeds from bank and other borrowings Repayments of bank and other borrowings Proceeds from PRC corporate bonds Repayments of PRC corporate bonds Procoods from senior notas Repayments of senior notes Repayments of Convertible bonds Repayment to unit holders of consolidated investment entities Repurchase of shares Procoods from sharos issuod Issuance of ordinary shares pursuant to share option scheme Dividends paid Acquisitions of non-controlling interests in subsidiaries Proceeds from disposal of shares of Evergrande Property Services Limited Capital injection from non-controlling interests Cash advance from associates Cash advance from joint ventures Cash advance from non-controlling interests Repayment to associates Repayment to joint ventures Repayment made to non-controlling interests Restricted cash pledged for bank borrowings Deposits for other borrowings Principal olomonts of lease payments (57,779) (51,075) 296 12.748) (33,841) 40 40 46,932 457 34,489 10,258 25,751 39,772 630 37,112 7,154 (82) (24,766) (6,707) 28,606 (180) (617) (7.070) (7,065) (5,554 (295) (893) Net cash (used in /generated from financing activities (76,885) 143,163 Net increase cash and cash equivalents Cash and cash equivalents at beginning of year Exchange (lossesygains on cash and cash equivalents 9,050 150,056 (354) 20.498 129,364 194 Cash and cash equivalents at end of year 158,752 150,056 FINANCE COSTS, NET Year ended 31 December 2020 2019 RMB million RMB million Interest expenses - Bank and other borrowings Senior notes and convertible bonds - PRC bonds - Less: interest capitalised 58,525 19,876 3,321 (69,462) 51,395 13,275 3,770 (50,924) 12,260 17,516 Exchange (gains)/losses from borrowings Other finance costs (10,301) 281 4,022 1,225 2,240 22,763 BORROWINGS 31 December 2020 2019 RMB million RMB million Borrowings included in non-current liabilities: Senior notes (note (a)) PRC corporate bonds (note (b)) Convertible bonds (note (c)) Bank and other borrowings (note (d)) 151,277 45,011 13,520 420,581 136,601 45,195 13,427 458,027 630,389 653,250 Less: current portion of non-current borrowings (249,334) (225,524) 381,055 427,726 Borrowings included in current liabilities: Bank and other borrowings Current portion of non-current borrowings - Senior notes (note (a)) - PRC corporate bonds (note (b)) Convertible bonds (note (c)) - Bank and other borrowings (note (d)) 86,143 249,334 26,039 23,090 13,520 186,685 335,477 146,645 225,524 22,637 25,253 177,634 372,169 Total borrowings 716,532 799,895 TRADE AND OTHER PAYABLES 31 December 2020 2019 RMB million RMB million 544,653 139,918 Trade payables third parties (note (C)) Other payables: - associates (note 39(b)) - joint ventures (note 39(b)) - non-controlling interests (note (a)) - payables for acquisition of land use rights payables for acquisition of subsidiaries and associates - third parties (note (b)) Accrued expenses Payroll payable Deferred income from grants Lease liabilities Other taxes payable 621,715 163,892 1,014 50,969 13,371 39,597 7,781 51,160 457 38,623 12,924 34,847 12,823 40,244 7,643 3,374 1,551 1,542 23,784 10,412 2,245 2,983 3,190 34,015 838,452 722,465 Less: non-current portion Other payables: non-controlling interests (note (a)) - joint ventures (2,546) (2,546) (4,593) (2,640) (1,953) (2,641) (2,044) Deferred income from government grants Lease liabilities (1,551) (750) (9,278) (4,847) Current portion 829,174 717,618