This case investigates the downfall of Ocean Park Corporation (Ocean Park or the park) from the perspective of financial statement analysis. Ocean Park’s performance significantly declined from a surplus of HKD127.2mn in FY2013 to a severe deficit of HKD557.3mn in FY2019. This was mainly attributable to the shrinking revenue size and mounting difficulties in controlling the operating costs during this period. In 2020, Ocean Park was hard-hit by the coronavirus pandemic, which pushed it further to the verge of liquidation. After rounds of debates, the Hong Kong legislature eventually approved of a relief fund of HKD5.4bn in taxpayers’ money.
The case seeks to highlight the financial ratios and metrics commonly used in financial statement analysis, and their interpretations. It provides insights on Ocean Park’s financial performance in terms of profitability, liquidity, solvency, and operational efficiency. Students will tackle practical questions regarding financial statement analysis of Ocean Park from FY 2013 to FY2019, and the financial impact of the relief fund by means of pro forma financial statements over the next few years.
On completion of the case, students will be able to:
1. Make use of accounting ratios to perform financial analysis of a firm.
2. Analyze the financial performance of a firm with the use of DuPont analysis.
3. Explain the accounting implications of a government bailout.
4. Construct pro-forma financial statements with appropriate assumptions.