Peer to Peer Analysis of Stockland and Mirvac

BUSINESS FINANCE

Contents
INTRODUCTION.................................................................................................................................3
ANALYSIS...........................................................................................................................................4
LIMITATIONS OF THE ABOVE ANALYSIS..................................................................................11
CONCLUSION...................................................................................................................................12
RECOMMENDATION.......................................................................................................................13
Bibliography........................................................................................................................................14

INTRODUCTION
In today’s dynamic market, it is important for an investor to make his investment decisions
investment manager is aimed to provide reasonable financial advices to its corporate and
private clients to guide those regarding investments so that they can invest their money in the
best possible manner. (Bragg, 2016)
In the current situation, being an investment manager, the institutional investor from the
overseas is interested in investing in the blue chip companies of the Australian market. The
following report contains the peer to peer analysis of two large companies operating under
the same industry. The companies considered for this analysis are Stockland and Mirvac. The
two companies are one of the largest diversified Australian companies in the real estate and
property business. (Case, 2012)
Mirvac is in the field of property industry since 45 years and is recognized for its excellent
capabilities of managing the assets. It owns an image of delivering products and services of
superior quality across the country. Mirvac is situated in four key cities, that is, Sydney,
Melbourne, Brisbane and Perth. It owns over $18 billion of assets which are managed across
the industrial and retail sector. The activities of the company aims at creating a long term
value for its security holders by providing high quality assets and projects for both
commercial and residential purposes. Mirvac has an approach of handling all its projects
whether an leasing project or property management from planning to designing, developing
and constructing (Dickson, 2017). The company aims at innovations of how better it can
redefine the landscape and create a lively and linked environment, so as to leave a long
lasting heritage for coming generations.
Stockland, founded in 1952, is one of the largest diversified company dealing in the property
and real estate business . With owning of $17.9 billions of real estate assets, the company has
its own retail centres and logistics centres (Rosenfield, 2009). It owns business parks and
retirement living villages.it has office assets and holds projects for both commercial and
residential purposes. It aims at being one of the greatest companies dealing in real estate
business alongwith making a valuable contribution to the society and the nation as a whole. It
considers all the social factors equally important such as hygiene living, strong social
connections, access to education opportunities in order to achieve its goal. It has created The

Stockland CARE Foundation , National Partnerships and such other local communities that
helps the company to spread its believes to live in a better way (Edwards, 2014).
ANALYSIS
Analyzing financial statements using various financial tools is considered as one of the best
way to understand the operations of the business, its future prospects and its financial
performance & position in the market. Ratio analysis is one of the most used financial
analysis tools to assess various aspects of a company’s operations and performance regarding
solvency, liquidity, efficiency and profitability. It helps in comparing the financial data of a
company with its own previous year’s historical data, other companies financial statements
and with the industry average (Schnapf, 2011).
For peer to peer analysis of Stockland and Mirvac, a ratio analysis of the said companies have
been made to compare them on a common base and make the required investment decisions
accordingly (Schroeder, 2014).
RATIO ANALYSIS
Liquidity Ratio is an indicator of the liquidity position of the company ,i.e., whether the
company owns adequate current assets that it can convert into cash readily and meet its
current dues or obligations. It measures a company’s ability of how promptly it can meet up
with its debt obligations if in case it becomes due. Usually, current ratio and quick ratio are
indicators of liquidity position of a company (Edwards, 2014).
 In the current situation, the current ratio of the Stockland is 0.35 and that of Mirvac is
1.09. higher the current ratio is, the better its liquidity position is. As the ratio
suggests, Mirvac shows a better position than Stockland. However, even Mirvac’s
ratio is not an ideal one as the ideal ratio is 2:1. Mirvac owns current assets of $1027
millions while Stockland owns $296 millions more than the former company. In spite
of owing more assets in value, it is observed that Stockland has its debt obligations
almost four times of Mirvac indicating the burden of liabilities are more on Stockland.
Current ratio STOCKLAND MIRVAC
Current Asset 1323 1027
Current liability 3778 944
Current ratio 0.35 1.09