Financial Analysis of Goodman Group: Strengths, Weaknesses and Competitor Analysis

REPORT ON GOODMAN GROUP
GOODMAN GROUP

Table of Contents
1. INDUSTRY INTRODUCTION................................................................................2
2. Description of Company......................................................................................... 2
3. FINANCIAL INSTRUMENT ANALYSIS..................................................................3
4. Part-A................................................................................................................ 4
FIANANCIAL RATIO ANALYSIS................................................................................ 4
3 key financial ratios that apply to your chosen company....................................................4
Computation of the financial ratios based on the financial statements...................................4
STRENGTHS AND WEAKNESS................................................................................6
Part-B COMPETITOR ANALYSIS............................................................................7
5. FINANCIAL MARKET ANALYSIS.........................................................................7
6. Finding CONCLUSIONS AND RECOMMENDATIONS...............................................8
REFERENCES......................................................................................................... 10
Appendix.............................................................................................................. 12

1. INDUSTRY INTRODUCTION
In the world of 21st centaury, the investors are always on the lookout for the better
opportunities for the investments. Now as the world is opening globally, more and more
options are getting available for the investors (Bond, 2010). Commercial property is one such
option. Due to considerable and significant cash flow advantage, growth and stability in
rental prices, decline in vacancy rates, commercial property is fast becoming a smart and top
most choice for the investors in Australia. In last few years downsizing of real estate market,
decreased retail trade profits and boom in online marketing has benefited the commercial
property market and made it investor’s hot favourite (Goodman Company, 2019).
Commercial Property segment is very diversified and includes office buildings, medical
centres, retail stores, hotels, land for commercial farming, malls, warehouses and
redevelopment land. From 2012-2017, commercial real estate market has recorded growth of
10.6 % and revenue of $1.3 billion (Ball, Lizeiri, Macgregor, 2012). The economy in
Australia is now shifting more towards the service based industries and thus so need for the
rented office has increased in last decade which has resulted in high number of revenue and
increased growth (Brigham, and Ehrhardt, 2013).
In this report we are undertaking Goodman group for further study and will do the detailed
analysis of the company financials. We will in detail analyse the various financial ratios,
financial instruments and analysis of strengths and weaknesses of internal factors (Robinson,
and Burnett, 2016).
2. Description of Company
Goodman Limited is an Australian company founded in 1989 by Gregory Goodman.
Company is an integrated industrial and commercial property group and deals in owing,
developing and managing real estate in Australia. The headquarters of the company is
situated in Sydney, New South Wales, Australia. Company profile includes business and
office parks, logistics facilities on large scales and warehouses worldwide. The Goodman
group was listed in ASX in 1995 with eight properties and valuation of A$75 million as
Goodman Hardie Industrial Property Trust. In 2000 it merged with Macquarie Industrial
Trust and became Macquarie Goodman Industrial Trust. Following many acquisitions and
mergers in 2005, it was renamed Macquarie Goodman Group and became largest industrial
property group in Australia. In 2007, Macquarie Bank sold 7.7% interest and company again

got renamed to Goodman Limited. In the last decade company has shown incomprehensible
organic growth, done many acquisitions and mergers, and expanded among European,
American and Asian market (Savytska, 2018).
According to reports, the Group is operating in 16 countries, had 432 properties with69 active
developments going on, as of September 2014. The market capitalization of company stood
at AUD $8.7 billion. Goodman had reported its earning before interest and tax to be $138 m
between 2007 to 2014. The total revenue reported in 2013-2014 was A$ 1,182,800,000, and
net income reported in 2013-2014 was A$ 601,100,100. Goodman Group has 3 divisions:
Development Management, Fund Management and Property Portfolio (Serôdio, McKee, and
Stuckler. (2018)
3. FINANCIAL INSTRUMENT ANALYSIS
There are several financial instrument analysis which could be used by company to raise the
funds for its business. In case of the Goodman Limited, it has been dealing in the financial
instruments such as letter of the credits, bill of exchanges and forward contract. These
financial instruments are helpful for the company to strengthen its return on capital employed
by keeping the low financial cost of capital. The bill of exchange is used by the company to
allow its debtors to pay their debts later on when they do not have capital to make the
business. This allow organization to strengthen the overall turnover. The letter of the credit is
used by the Goodman Limited to take the loan or finance the particular project by the bank.
Goodman Limited has financed AUD $ 123 million in its business by using the letter of the
credit. Most of the assets such as plants and machinery recorded in the balance sheet of the
company is purchased by using the hire purchase agreement. It is also considered as financial
instrument which is used by company to finance its plants and machinery (Tahir, and Azhar,
2013).
Off balance sheet are the imperative items for the investors to assess the financial health of
the company. In case of the Goodman Limited, company has collateral debt securities in its
balance sheet which is regarded as offshore balance sheet in its books of account. These are
the toxic assets in the books of account of Goodman Limited. These offshore assets are not
inherently intended to the balance sheet and owned by other companies. Goodman Limited
has recorded offshore assets of AUD $ 156 in its balance sheet which is owned and supported
by the other companies with a view to share the risk and return associated with the particular