Ratio Analysis of Stockland Group and Mirvac Group

BUSINESS ENTREPRENEUR

EXECUTIVE SUMMARY
The preparation and presentation of financial statements form a crucial task of the management,
analyzing such financial statements with the best possible tools is a crucial task for the investors
and all such users intending to use these statements. Ratio analysis is one such comparative tool
used to understand the financial position of the company, its performance over the last years, it's
trend analysis, comparison with other companies in the same industry, etc. Ratio analysis
however considers only financial information and neglects every non-financial information
which might be important to understand the actions of the company better than the numbers
itself.

Contents
INTRODUCTION...........................................................................................................................4
RATIO ANALYSIS........................................................................................................................5
COMPARISON OF OVERALL PERFORMANCE.....................................................................25
RECOMMENDATION.................................................................................................................26
CONCLUSION..............................................................................................................................27
Bibliography..................................................................................................................................28

INTRODUCTION
As a business management consultant, being appointed by Mr. Benson Evans who is the Chief
Operations Officer of Hotel Properties Limited (HPL), the companies to be compared are
Stockland Group and Mirvac Group. Both of these companies are involved in real estate business
and have approached HPL for potential partnership in residential and resort development
(Atkinson, 2012). As part of the consultancy agreement, the overall performance of both the
companies have been analyzed individually using ratio analysis as stated below (Alvarez, 2013):

RATIO ANALYSIS
[all figures are in $]
Capital Structure and Leverage measures help us to understand the sources of finance and the
dependence of debts over shareholder's equity as well as the burden of debts over the company.
The various ratios helps us to understand the value of the company in terms of net worth, it's
employed capital, whether the net worth is worth the fixed assets owned, the obligations over the
company in terms of interest costs, etc (Berry, 2009).
Stockland Group :
Net Worth
Particulars 2013 2014 2015 2016 2017
Total Assets 14069700000 14900000000 15729000000 16942000000 17495000000
Total Liabilities 5874800000 6602000000 6942000000 7688000000 7568000000
Net Worth
( Total Assets - Total
Liabilities)
8194900000 8298000000 8787000000 9254000000 9927000000
Capital Employed
Particulars 2013 2014 2015 2016 2017
Total Assets 14069700000 14900000000 15729000000 16942000000 17495000000
Current Liabilities 2801800000 2953000000 3293000000 3714000000 3778000000
Capital Employed
(Total Assets - Current
Liabilities) 11267900000 11947000000 12436000000 13228000000 13717000000
 From 2013 to 2017, we see an increase in the net worth of the company which is
basically due to increase in total assets every year. Over a period of five years, the
company, in total, shows its net worth 20% up as compared to what it was in 2013. We
see a similar change in capital employed where the current capital is approximately 21%

ahead of what it was in 2013 (Boyd, 2013). Also, it shows an increase in capital
employed.
Fixed Assets To Net Worth Ratio
Particulars 2013 2014 2015 2016 2017
Fixed Assets 12862800000 13294000000 14575000000 15531000000 16172000000
Net Worth 8194900000 8298000000 8787000000 9254000000 9927000000
Fixed Assets to Net
Worth Ratio (Fixed
Assets / Net Worth) 1.57 1.60 1.66 1.68 1.63
Current Liablities To Net Worth
Particulars 2013 2014 2015 2016 2017
Current Liabilities 2801800000 2953000000 3293000000 3714000000 3778000000
Net Worth 8194900000 8298000000 8787000000 9254000000 9927000000
Current Liabilities to
Net Worth (Current
Liabilities / Net Worth)
0.34 0.36 0.37 0.40 0.38
 From 2013 to 2017, we see increasing fixed assets to net worth ratio, which is
undesirable in normal business days as it shows the extent of owner's cash being locked
up in fixed assets and how much cash is left for business operating activities. However,
Stockland shows 1.63 times of net worth in fixed assets. Also, we see an increase in
current liabilities to net worth ratio which is undesirable for a business (Easton, 2010).
Total Debt Ratio
Particulars 2013 2014 2015 2016 2017
Total Liabilities 5874800000 6602000000 6942000000 7688000000 7568000000
Total Assets 14069700000 14900000000 15729000000 16942000000 17495000000
Total Debt Ratio
(total liabilities / total
0.42 0.44 0.44 0.45 0.43