This report aims at the business analysis of Emaar Properties which is one of the largest builders in the world based on supply / demand principles that affects price which subsequently dominates entire performance of the system
Analysis covers Emaar's astonishing financial results over the past few years in the sector. We would try to figure out what are the different business assets company posses? Further more details would be given by analyzing recent performance of the organization with last year's.
Analysis will focus on the key areas of Assets and its different sub domains. We will also give a detailed analysis of what could possibly be the future of Emaar Properties. The analysis is primarily on the basis of the balance sheet provided by the organization to the public and various secondary data collection tools. Analysis also contains what may be the initiative to be taken by the Emaar Properties for prevention of losses and gaining profits.
Assets are each and everything that is owned by the organization and has some cash value. Every item from pen to computer comes in assets. Assets are the resources of a company that have been earned through many business transactions. They can be both tangible like inventory, buildings and equipments and intangible like goodwill, trademarks, copyrights, patents and computer programs. These assets have some economic value. Intangible assets add value to the firm although they are non physical as they give the firm some kind of advantage in the market place. Some prepaid services that are not yet expired are also included in the assets of an organization like prepaid rent, prepaid insurance etc. (Balance Sheet)
Bank balance and cash
Bank balance and cash is the liquid money that is in hand of the owner. It also includes the amount which is not yet been deposited in the bank this amount is also sometimes referred to as hard cash as it is always with the company and is always available for disposal if the company requires it. It is always listed on the first position in the list.
Cash equivalent also comes under this category which means all the assets that are ready to be converted in to the liquid money in near future. It includes all treasure bills, commercial papers, marketing security, short term government projects etc. Cash equivalent is although placed in the same category it is a bit different from cash as it is not available at the disposal until it is received by the company. It is also the amount of money that a company keeps it in its bank accounts like certificate of deposits, bonds and market funds.
The sum of bank balance and cash balance is equal to the total amount that can be used at any time by the company. Bank balance and cash can together be used as representative of the company's strength as this amount can be used whenever the company sees a bad period as this amount can be made available in a very little time and with nearly no formalities related to them.
Bank balance sometimes also proves vital in getting loans for the projects of a company as bank balance and cash are commonly seen to be related to the income of a company
Percentage increase: 14.0982%
The increase in the bank balance and cash would prove to be very beneficial. These are the liquid money that an entrepreneur could use to expand its business and to try new product. These cash would be helpful in contracting new technology or for training of current employees. As for all this helps in modifying the current structure for the system of organization, taking it to new heights. The liquid cash can also be treated as a measure to earn revenue by lending it to other organizations or new business or just simply by putting it into a bank.
Increase in bank balance and cash is favorable for the company. Growing bank balance and cash reserves of the company often indicate its strong performance. Cash offers protection against tough times and moreover, it also gives the company more options for future growth. Furthermore, companies having ample cash on their balance sheets attract more number of investors.
There is one more type of cash in the balance sheet and that cash is bad for company's balance sheet. This is the cash borrowed from the bank when a company is not able to generate enough profits from the business it used to take loan from banks and that also includes in cash. But this cash is accounted in the company's debt part.
The cash earned by selling any assets also come under this category. The organization has increased their cash means currently they want some more backup for future. So, if something happens they could be safe. This liquid money can also be seen as a possibility for early companies for acquisition type of thing. They could see this as an opportunity for their organization to grow and have some for them who could lend money. (Balance Sheet Accounting) Other receivables, deposits and prepayments
Trade receivables or Accounts receivables is the money owned by an organization for sales of products and / or services. These could be accounting transaction for door - to - door delivery with bills. This is done by creating an invoice, mailing (via electronic or physical media) to the customer then he / she must pay the credit in a given time frame.
A company may also increase income from other sources of its investments which also forms part of the assets of the company all these are put together in this category
This can be done automatically for large organization by use of advanced technology like accounting software on a dedicated server computer. Trade receivables are shown in the company's balance sheet to show owned money or entities outside the company.
The company generally expects to receive these receivables within a year so they are classified as current assets but it is not always possible to recover the whole amount within a year as sometimes clients may not pay the amount in stipulated time.
These are useful for the company in getting loans and they can also be sold through factoring i.e. at a lower amount of immediate money.
Percentage increase trade receivables: 120.54%
Percentage increase other receivables: 35.5052%
It is good for the company to have such a high increase in trade receivables because it is clearly a sign of increasing sales of a company's products and services. But if it's near to double growth is compared to that in cash assets, it comes out that the financial efficiency of the company has decreased. May be the company's collection period is growing longer or the speed at which company collects is slowing down. Company should special attention to this category as its financial health depends upon timely collection ofreceivables.
The receivables also help in creating a large user backup space. If you give a user to try certain products for the first time, it is likely that if the product is good he / she would surely purchase it the next time. On the other hand if you're new product is just launched into the market and you don't allow debt than surely not many people will buy it for a try. Home to home delivery is a classic example of receivables and prepayments, we as a company would like our customer to have least trouble before getting our product. So, delivery has to be made at home for allowing our users to have more faith on us.
It is the inventory of an organization which includes raw material, goods manufactured, work in process and also the items purchased for resale.
Development properties include everything that a company has that may lead to revenue in future. It may thus be helpful in estimating the revenues that may be generated in the near future without need of much input.
If the income from these sources is not generated in a stipulated time these may lead to losses to the company as cost is incurred in storing these properties and sometimes they may also loose there essence with time.
In order to get maximum profit out of these development properties it is important to use them in time so we can say that time management plays an important role in maximizing profit and making best use of development properties.
Percentage increase: 18.4255%
Development properties have increased by a significant amount. This is very much crucial for an organization to cope with the real cruel and advanced market. One has to regularly look into its internals and must increase it. The development properties include the land and other type of expansion of the organization also. All organization must expand even at a small pace. Emaar properties have shown such a phenomenal growth rate for the year 2007-08 which shows that the company is expected to be going somewhere big. These development properties can also be treated as the company is expected to have some type of advanced technology in near future. The competitors in the market are trying hard to bring Emaar down the size but the efforts company is putting into all of this can easily be checked by seeing the difference or the percentage growth rate of development properties from last to this year.
The increase in development properties also signifies that the CEO, director and the owner of the organization are open minded and believe to look into any new suggestions for the organization. These developmental properties may in any form. It can b a part of land, share in some other business sector. This property is helpful for the company to generate revenue in bad times. If the real estate business sector is on a downfall and some other sector like oil market is rising and the company has some investment in oil then that property can used at the time of recession in real estate business. This can be compared with the open culture at different organizations across the world. Emaar properties have built huge buildings all over the world and are expected to do the same in the future. So, Emaar has to do lot of research before creating other marvelous masterpiece.