M
Mahesh B
Guest
I am a student of Heriot Watt University ; and am currently working on my dissertation titles “Creation of a Benchmark for Financial Ratio's of the Real Estate Companies in the GCC (Gulf Commercial Cooperation) Countries"
I was wondering if you could opine on the following queries:
1.The companies have huge inventories of land - classified as - Land for investment and - Land for development - all this as Fixed Assets - I believe this should be listed under current assets as stock.
2.Due to the above the Current Assets are minimal; the Working Capital (Current Assets-Current Liabilities) is a negative value for some companies - how does one deal with this?
3.The ratio using this working capital is: Working capital ratio (Turnover / Working Capital) also becomes negative.
4.Other ratios affected by the huge Fixed Asset are : Fixed Asset Turnover ( Turnover / Fixed Assets)
5.Many of the companies do not have the Assets and Liabilities split into current and non-current, they have just clubbed them as assets and liabilities - I wonder why? due to this I have had to do the split as per my understanding and with a view to how the other co's have split up the asserts - mainly the land bank into current (under construction) and non-current (land for investment and land for development)
6.One company has received a grant from the government in the form of land, which they have listed in assets - and due to this their profit has jumped to 92 % for 2008! - How do I deal with this in the ratio analysis (I have decided to use the median to get my benchmark values instead of average to counteract the above?)
7.Stock if Zero in one company, the Stock Turnover Ratio (Turnover / Stock) gives a (/0) Error. The balance sheet shows a zero stock, but huge amounts of land banks in Fixed Assets. How may one deal with this?
Mahesh Butani
Abu Dhabi
UAE
I was wondering if you could opine on the following queries:
1.The companies have huge inventories of land - classified as - Land for investment and - Land for development - all this as Fixed Assets - I believe this should be listed under current assets as stock.
2.Due to the above the Current Assets are minimal; the Working Capital (Current Assets-Current Liabilities) is a negative value for some companies - how does one deal with this?
3.The ratio using this working capital is: Working capital ratio (Turnover / Working Capital) also becomes negative.
4.Other ratios affected by the huge Fixed Asset are : Fixed Asset Turnover ( Turnover / Fixed Assets)
5.Many of the companies do not have the Assets and Liabilities split into current and non-current, they have just clubbed them as assets and liabilities - I wonder why? due to this I have had to do the split as per my understanding and with a view to how the other co's have split up the asserts - mainly the land bank into current (under construction) and non-current (land for investment and land for development)
6.One company has received a grant from the government in the form of land, which they have listed in assets - and due to this their profit has jumped to 92 % for 2008! - How do I deal with this in the ratio analysis (I have decided to use the median to get my benchmark values instead of average to counteract the above?)
7.Stock if Zero in one company, the Stock Turnover Ratio (Turnover / Stock) gives a (/0) Error. The balance sheet shows a zero stock, but huge amounts of land banks in Fixed Assets. How may one deal with this?
Mahesh Butani
Abu Dhabi
UAE