The Financial Analysis of Aldar and Emaar Company

Added on - 16 Sep 2019

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EMAAR - ALDAR
Table of ContentsIntroduction......................................................................................................................................2Ratio analysis...................................................................................................................................31.Liquidity ratio.......................................................................................................................32.Solvency ratio.......................................................................................................................33.Efficiency ratio.....................................................................................................................44.Profitability ratio...................................................................................................................4Company relationship with employees and management...............................................................5Accountability of company..............................................................................................................5Investors Analysis............................................................................................................................5Source of finance Analysis..............................................................................................................5Cash flow analysis...........................................................................................................................6Income statement Analysis..............................................................................................................7Conclusion.......................................................................................................................................7Part -2...............................................................................................................................................8Company expansion by 25%...........................................................................................................8Sources of money............................................................................................................................8Strength and weakness...................................................................................................................10Company analysis..........................................................................................................................11Gearing ratio..............................................................................................................................11P/E ratio.........................................................................................................................................11Conclusion.....................................................................................................................................12Part -3.............................................................................................................................................12Current Commercial environment.................................................................................................12Management accounting techniques..............................................................................................131.Budgeting............................................................................................................................132.Financial planning..............................................................................................................133.Analysis of financial statement...........................................................................................134.Historical cost accounting...................................................................................................135.Fund flow statement...........................................................................................................146.Cash flow statement............................................................................................................147.Marginal costing.................................................................................................................148.Decision-making.................................................................................................................14
9.Communicating...................................................................................................................1410.Statistical and graphical techniques................................................................................1511.Revaluation accounting...................................................................................................15References......................................................................................................................................16
IntroductionIn this present paper, we will discuss the financial analysis of ALDAR and EMAAR Companythen both the financial statements are compared on the basis of financial ratios and statements ofthe company. The EMAAR is a real estate development company which is located in the UnitedArab Emirates. The company comes under the public joint stock company, and it is also listed onthe Dubai Financial Market as DFM: EMAAR. The EMAAR operates internationally, and itprovides management services and property development services (Emaar Properties PJSC et al.,2017). The company has sixty active companies and six business segments. The company ispresent in thirty-six markets across the North Africa, Middle East, Europe, Pacific, and NorthAmerica. The company comes under one of the largest real estate developers in the UAE. Thecompany is majorly known for its greatest achievements such as the development of Burj Khalifawhich is the tallest tower in the world and it is the seven-star hotels across the globe. Thecompany was founded in 1997 by its chairman Mohamed Alabbar (Aldar Properties et al., 2017).The company has diversified its interest into real estates which include the building of residents,commercials, malls, hospitals and others. The company directly contributes towards thedevelopment of the country and its revenue in the year 2010 was $3.307 Billion. The totalemployees of the company in 2010 were ten thousand. The company was owned by the public,and the founding shareholders of the company have 24.3 percent share in the company. Whereasthe ALDAR properties are also one of the real estate development company which is presiding inAbu Dhabi, United Arab Emirates. It is the investment management company which is popularfor the successfully delivery of various projects such as Al Jimi Shopping Centre, Yas Island, AlGurm Resort, Abu Dhabi commercial market and others. The company was founded in 2001,
and it is owned by the Abu Dhabi institutions. The company has various individual shareholderssuch as Abu Dhabi Investment Company, Abu Dhabi national hotel company, MubadalaDevelopment Company, and others. The company comes to the real estate industry, and itoperates in Abu Dhabi. The present portfolio of the company includes re-development,development within the Abu Dhabi which includes Al Raha beach, coconut island central marketand others. The EMAAR properties work internationally whereas the ALDAR properties worklocally within Abu Dhabi. The shares of ALDAR Company are 25.4% holds by the government,and the foreign ownership is passed by the government which does not exceed forty percent.The company accounts forty-five percent of the property within the capital in the past ten years.The company also contributes towards the gross domestic product of the country by developingthe infrastructure of the country. The company has a strong relationship with the government ofAbu Dhabi. The company has wide scope in the future because there are various businessopportunities in Abu Dhabi which enables to expand the business growth. The EMAARproperties have also developed neighborhoods of Dubai such as The Greens, The Springs, TheLakes, The Meadows and others. The EMAAR has done international projects in variouscountries such as Egypt, India, Saudi Arabia, Syria, Pakistan, and turkey.Ratio analysisThe company analysis is done on the basis of ratio analysis of the company in the year 2014-2015. The ratios analysis of the company enables to analyze the financial position of thecompany. The ratio analysis is defined as the type of financial analysis which is used to obtainthe quick indication regarding the financial position of the company within the particular time
period. The financial ratios are classified into four segments, namely, liquidity, profitability,solvency and efficiency ratios. The analysis of the financials of the company is described below:1.Liquidity ratioIt is defined as the ratio which is used to determine the liquidity of the company within theparticular time period. It measures the capability of the company to convert the assets into cashwithin one year.a.Current ratioIt is defined as the ratio which is calculated by dividing the current assets by currentliabilities. The ideal current ratio is 2:1 which shows that the company has twice currentassets in the context of current liabilities. The current ratio of the ALDAR Company in2015 is 1.23 and in the year 2014 is 1.21 which shows that the current ratio is increasedby 1.65%. It shows that the current ratio of the company is improved in the year 2015from the year 2014. The current ratio of the EMAAR Company in 2015 is 1.05 and in theyear 2014 is 0.79 which shows that the current ratio of the company is increased by32.91% (annualreport2015 et al., 2017). By comparing the current ratio of the both thecompany, it shows that the liquidity of ALDAR Company is more satisfactory than theEMAAR Company.2.Solvency ratioIt is also known as the leverage ratio which is used to calculate the ability of the company tosustain the operations indefinitely by comparing the debt level of the company with equity in theparticular period of time. It is used to determine the long-term sustainability of the company.b.Debt equity ratio
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