City University of Hong Kong
CB3041 Financial Statement Analysis
Semester A, 2024/25
Group Project
Assessment weight: 30% (including written report 15% and presentation 15%)
Written Report Submission Due Date: 11:59 pm, Friday, 6 Dec. 2024
Presentation Slides Submission Due Date: 11:59 pm, Friday, 15 Nov. 2024
Notes to Students
1. This is a group-based assignment. You could attempt to complete the project
assignment in a group of 3 - 6 members. You could discuss the assignment with
members of other groups, but you are reminded that plagiarism will be subject to
disqualification of the submitted work.
2. Marks are allocated based on the strength of the argument, clarity of presentation, the
proper reference to precedent cases, and comprehensiveness of consideration.
3. Generative Artificial Intelligence (GenAI) Tools are allowed to facilitate the group
project. For example, you can use GenAI Tools to inquire about related information,
polish sentences in group project reports, or refine presentation slides. However, you
need to verify the accuracy of information obtained from GenAI Tools. You need
to be responsible for any information that is shown in the group project.
4. One group member should submit the written report (Word or PDF) and presentation
slides (PPT) in soft copy on Canvas-Assignment on or before the deadline. Late
submission would be subject to a penalty of deduction of marks in accordance with
Departmental policy (30% marks deduction for any late submission within one
week and zero mark for late submission of more than one week).
Formatting
The written report on the group project should be consistent with professional standards,
including the following:
1. Title page: title of the report, name and student id of group members, course title, date
2. Work effort page: one page to briefly introduce each member’s work in the project
3. Main text: your analysis, result, and assessment
4. Appendix: calculations of financial ratios, tables, figures, etc.
5. References: all resources, such as books, magazines, journals, and internet sources
In addition, the report must adhere to the following formatting guidelines:
6. 12pt Times New Roman font
7. One-inch page margins on top, bottom, and sides
8. Main text is no more than 20 pages (1.5 spacing)
1
Presentation
1. Prepare 20 minutes’ presentation to show your analysis.
2. One slide to briefly introduce each member’s work in the project.
3. Presentation slides can not be changed after submission deadline. That is, you can
not see presentation of other groups and then revise your slides to present.
4. Tips: use proper font in the slides so that it can be read by students even in the last row;
use proper voice level so that everyone can hear; show numbers in a more interpretable
way (e.g., present numbers in thousand or million, use comma like “3,000,400” instead
of 30004000, use % to express certain ratio like 40% instead of 0.4).
Objectives
Financial reports of publicly traded companies provide valuable information about the
companies to shareholders, creditors, and other users. Using information from a financial report,
the group project is designed to help you integrate many aspects of financial reporting issues.
The project is also designed to apply the tools and techniques learned during the course in order
to produce a systematic analysis and critical assessment of the financial performance of a
publicly traded company.
Selected Company and Annual Report
Select a type of business that you would like to investigate. The businesses that you can
consider include restaurants, retail stores, manufacturers, airlines, hospitals, property
developers, etc. Select a specific company in your chosen business, e.g. for restaurants you can
select companies such as Cafe De Coral or Fairwood, etc. The most recent reports can be
downloaded from the Hong Kong Exchange website or Investor Relations on a company’s
website.
Tasks
Students are required to conduct the following analysis for the selected company. If there are
any inconsistencies, irregularities, or outliers in the selected company’s reports, please discuss
them.
1. Identify economic context:
(i) Define the industry (narrower or broader definition).
(ii) Identify the main competitors (at least two competitors).
(iii) Identify industry characteristics (level of competition, barriers of entry, monopoly,
etc.).
(iv) Discuss economic conditions (market-wide, industry-specific, or company-
specific).
2. Identify and discuss company strategies. Compared with the main competitors, how does
the company generate any competitive advantage?
3. Assess earnings quality:
2
(i) Source(s) of earnings: Earnings from core operations or not?
(ii) Review the reasonableness of revenue, expense, and asset recognition policies (if
possible). Any concerns?
(iii) Are adjustments necessary to analyze the performance (for reliable comparisons
over time and/or with other companies)?
(iv) Net income vs. CFO.
(v) Possibility of earnings manipulation?
4. Do a combination of time-series and cross-sectional analysis of financial ratios
(Profitability, Liquidity, Activity, Solvency, and Market Ratios)
(i) Analyze the company over the years (using annual reports for 2023, 2022, 2021).
(ii) Analyze the company against two of its main competitors.
Note that you do not have to discuss all of the ratios we have discussed in class. Choose
the ones that you think are most relevant.
Resources
1) Financial reports can be downloaded from Investor Relations on a company’s website
normally.
2) Financial reports for publicly listed companies:
➢ https://www.hkexnews.hk/index.htm
3) Other Resources:
➢ Yahoo Finance: https://finance.yahoo.com/
➢ Factiva: http://www.cityu.edu.hk/lib/eres/database/info/factiva.htm
