The followings are the financial statements (Statement of Financial Position and Income Statement) for Caf de Corall and Fairwood Holdings. Caf De Coral Caf de Coral Consolidated Statement of Financial Position Consolidated Income Statement As at 31 March 2019 For the year ended 31 March 2019 March 31, 2019 March 31, 2018 2019 2018 HK$'000 HK$'000 HK 000 HK 000 ASSETS Non-current assets Revenue 8. 493,883 8,427,399 Leasehold land and land use rights 75,231 79,485 Cost of sales (7,356,665) 7,385,291) Property, plant and equipment 1,922,710 2,020,925 Gross profit 1,137,218 1,012, 108 Investment properties 628,000 663,300 Intangible assets 1,852 4,051 Other gains/(losses), net 17,687 (13,706) Deferred income tax assets 12,681 30,506 Administrative expenses (447,788) (458,819) Available-for-sale financial assets 147.978 Financial assets at fair value through Operating Profit 569,583 other comprehensive income 154,102 Finance Income 14,803 11,661 Non-current prepayments and deposits 307,871 295,657 3.102.447 3.241.902 Profit before income tax 721,920 581,244 Current assets Inventories (129,810) (121,949) 241,325 Income tax expense 234,362 Trade and other receivables 165,086 191,466 Profit for the year 592, 110 459,295 Prepayments and deposits 126,813 121,198 Current income tax recoverable 1,017 3,383 Profit attributable to: Bank deposits with maturity over three Equity holder of the Company 590,285 458,055 months 21,865 22,778 Non-controlling interests 1.825 1240 Cash and cash equivalents 835,537 801,240 592.110 459.295 1.391.643 1,374,427 Earnings per share for profit attributable to Total assets 4,494,090 4,616,329 the equity holders of the Company Basic 1.02 0.79 EQUITY Diluted 1.01 0.79 Capital and reserves attributable to the equity holders of the Company Share Capital 58,554 58,554 Share Premium 616,811 616,811 Share held for share award scheme (133,020) (145,053) Other reserves 537,776 602,542 Retained earnings Proposed dividends 380,603 573,832 Others 1,954,764 1.862.995 3,415,488 3.569.681 Non-controlling interests 6,262 3,819 Total equity 3,421,750 3,573,500 LIABIUTIES Non-current liabilities Deferred income tax liabilities Provision for long service payments Retirement benefit liabilities 29,479 45,258 13,459 88, 196 33,520 34,990 18.747 87,257 Current liabilities Trade payables Other creditors and accrued liabilities Current income tax liabilities 219,710 728,134 39,300 984,144 207,478 706,965 41,129 955,572 Total liabilities Total equity and liabilities 1,072,340 4,494,090 1,042,829 4,616,329 Fairwood Holding Consolidated Statement of Financial Position At 31 March 2019 2019 2018 HK$'000 HK$'000 Non-current assets Fairwood Holding Consolidated Statement of Profit or Loss For the year ended 31 March 2019 2019 2018 HK$ 000 HK$ 000 2,970,524 2,840,571 (2,586,321) (2,434,701) 384,203 405,870 Revenue Cost of sales Gross Profit 46.030 44. 150 468 503 493,838 Investment properties Other property, plant and equipment Interests in leasehold land held for own use under operating lease Goodwill Rental deposits paid Other financial assets Deferred tax assets 5,980 518,633 1001 68,517 19,825 44 608,020 6,192 546,060 1 .001 71, 602 7,785 107 626,555 Other revenue Othernet (loss/gain Selling expenses Administrative expenses Net impairment losses on property, plant and e Valuation (losses/gain on investment propertie Profit from operations Finance costs Profit before taxation Income tax Profit for the year attributable to equity shareholders of the Company 10,227 (835) (30,063) (136.227) (10,221) (1.880) 215,204 (32) 215 172 (35.225) 7,377 10,778 (31,227) (133,947) (8,668) (4,850 255,033 (68) 254.965 (38,888) Current assets 179,947 216,077 Inventories Trade and other receivables Other financial assets Current tax recoverable Bank deposits and cash and cash equivalent 33,560 102,424 11,950 40,500 87.747 16,246 67 520,597 665,157 Earnings per share Basic Diluted 519,854 667,788 140 cents 138.99cents 169.16 cents 167.11cents Current liabilities Trade and other payables Bank loan Current tax payable Provisions 385,203 143 10.494 23.687 419.527 248.261 856,281 430,890 1,720 10,491 11.774 454,875 210.282 836,837 Net current assets Total assets less current liabilities Non-current liabilities Bank loan Deferred tax liabilities Rental deposits received Provisions 19,599 2.286 56.718 78,603 777,678 143 24,614 2,165 4 6.809 73,731 763,106 Net Assets Capital and reserves Share Capital Reserves 128,650 649,028 777.678 127,793 635,313 7 63.106 Note: Average Total Equity = (Beginning balance of shareholder's equty + Ending balance of shareholders' equity)/2 1. Perform vertical analysis for the two companies for the years of 2018 and 2019. (10 marks) 2. Perform ratio analysis for the two companies for the year ended 31 March 2019. The scope of analysis should include liquidity, profitability, and solvency. Please show the workings of the accounting ratios. (10 marks) 3. Recommend with reasons which company is considered to have better financial performance. (10 marks) The followings are the financial statements (Statement of Financial Position and Income Statement) for Caf de Corall and Fairwood Holdings. Caf De Coral Caf de Coral Consolidated Statement of Financial Position Consolidated Income Statement As at 31 March 2019 For the year ended 31 March 2019 March 31, 2019 March 31, 2018 2019 2018 HK$'000 HK$'000 HK 000 HK 000 ASSETS Non-current assets Revenue 8. 493,883 8,427,399 Leasehold land and land use rights 75,231 79,485 Cost of sales (7,356,665) 7,385,291) Property, plant and equipment 1,922,710 2,020,925 Gross profit 1,137,218 1,012, 108 Investment properties 628,000 663,300 Intangible assets 1,852 4,051 Other gains/(losses), net 17,687 (13,706) Deferred income tax assets 12,681 30,506 Administrative expenses (447,788) (458,819) Available-for-sale financial assets 147.978 Financial assets at fair value through Operating Profit 569,583 other comprehensive income 154,102 Finance Income 14,803 11,661 Non-current prepayments and deposits 307,871 295,657 3.102.447 3.241.902 Profit before income tax 721,920 581,244 Current assets Inventories (129,810) (121,949) 241,325 Income tax expense 234,362 Trade and other receivables 165,086 191,466 Profit for the year 592, 110 459,295 Prepayments and deposits 126,813 121,198 Current income tax recoverable 1,017 3,383 Profit attributable to: Bank deposits with maturity over three Equity holder of the Company 590,285 458,055 months 21,865 22,778 Non-controlling interests 1.825 1240 Cash and cash equivalents 835,537 801,240 592.110 459.295 1.391.643 1,374,427 Earnings per share for profit attributable to Total assets 4,494,090 4,616,329 the equity holders of the Company Basic 1.02 0.79 EQUITY Diluted 1.01 0.79 Capital and reserves attributable to the equity holders of the Company Share Capital 58,554 58,554 Share Premium 616,811 616,811 Share held for share award scheme (133,020) (145,053) Other reserves 537,776 602,542 Retained earnings Proposed dividends 380,603 573,832 Others 1,954,764 1.862.995 3,415,488 3.569.681 Non-controlling interests 6,262 3,819 Total equity 3,421,750 3,573,500 LIABIUTIES Non-current liabilities Deferred income tax liabilities Provision for long service payments Retirement benefit liabilities 29,479 45,258 13,459 88, 196 33,520 34,990 18.747 87,257 Current liabilities Trade payables Other creditors and accrued liabilities Current income tax liabilities 219,710 728,134 39,300 984,144 207,478 706,965 41,129 955,572 Total liabilities Total equity and liabilities 1,072,340 4,494,090 1,042,829 4,616,329 Fairwood Holding Consolidated Statement of Financial Position At 31 March 2019 2019 2018 HK$'000 HK$'000 Non-current assets Fairwood Holding Consolidated Statement of Profit or Loss For the year ended 31 March 2019 2019 2018 HK$ 000 HK$ 000 2,970,524 2,840,571 (2,586,321) (2,434,701) 384,203 405,870 Revenue Cost of sales Gross Profit 46.030 44. 150 468 503 493,838 Investment properties Other property, plant and equipment Interests in leasehold land held for own use under operating lease Goodwill Rental deposits paid Other financial assets Deferred tax assets 5,980 518,633 1001 68,517 19,825 44 608,020 6,192 546,060 1 .001 71, 602 7,785 107 626,555 Other revenue Othernet (loss/gain Selling expenses Administrative expenses Net impairment losses on property, plant and e Valuation (losses/gain on investment propertie Profit from operations Finance costs Profit before taxation Income tax Profit for the year attributable to equity shareholders of the Company 10,227 (835) (30,063) (136.227) (10,221) (1.880) 215,204 (32) 215 172 (35.225) 7,377 10,778 (31,227) (133,947) (8,668) (4,850 255,033 (68) 254.965 (38,888) Current assets 179,947 216,077 Inventories Trade and other receivables Other financial assets Current tax recoverable Bank deposits and cash and cash equivalent 33,560 102,424 11,950 40,500 87.747 16,246 67 520,597 665,157 Earnings per share Basic Diluted 519,854 667,788 140 cents 138.99cents 169.16 cents 167.11cents Current liabilities Trade and other payables Bank loan Current tax payable Provisions 385,203 143 10.494 23.687 419.527 248.261 856,281 430,890 1,720 10,491 11.774 454,875 210.282 836,837 Net current assets Total assets less current liabilities Non-current liabilities Bank loan Deferred tax liabilities Rental deposits received Provisions 19,599 2.286 56.718 78,603 777,678 143 24,614 2,165 4 6.809 73,731 763,106 Net Assets Capital and reserves Share Capital Reserves 128,650 649,028 777.678 127,793 635,313 7 63.106 Note: Average Total Equity = (Beginning balance of shareholder's equty + Ending balance of shareholders' equity)/2 1. Perform vertical analysis for the two companies for the years of 2018 and 2019. (10 marks) 2. Perform ratio analysis for the two companies for the year ended 31 March 2019. The scope of analysis should include liquidity, profitability, and solvency. Please show the workings of the accounting ratios. (10 marks) 3. Recommend with reasons which company is considered to have better financial performance. (10 marks)