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Authors:
Anupam Mehta (Institute of Management Technology, Dubai)
Published in:
2009
Length:
20 pages
Data source:
Published sources

Abstract

Emaar Properties PJSC, a Dubai-based Public Joint Stock Company, is one of the world''s largest real estate companies. With six business segments and more than 60 active companies, Emaar has a collective presence in over 36 markets spanning the Middle East, North Africa, Pan-Asia, Europe and North America. Emaar has marked a significant milestone with the opening of Burj Dubai, the world''s tallest building. Emaar has established a very good track record of profitability over the years. In 2007 Emaar has earned annual net profits of AED 6.575 billion, 3 per cent higher than the net profit of AED 6.371 billion recorded in 2006. Emaar''s annual revenue also increased by 25 per cent to AED 17.566 billion compared to AED 14 billion in 2006 but 2008 has witnessed a drastic fall in net profits. Emaar showed deterioration in the net profit to AED 3.03 billion, a decrease of 54% in net profit as compared to the last year profit. Emaar share prices also went very low. With share prices falling to as low as 1.89 AED in Jan 2009, bringing the year to-date losses to a total of more than 80%, it seems that investor''s have lost faith in Emaar''s ability to earn and deliver the same profitability that it has done in past. This raises concern about the financial health of the company. It deals with issues like: Is Emaar Financially Fit? What factors should we look into to find out the financial health of the company? What reports should be looked into and analysis conducted to draw interpretations regarding the financial performance of the company. To what extent do the external factors affect the performance of the company? The case provides information regarding financials statements - income statement, balance sheet and cash flow statement of the company for the past five years. The five year time span will enable the students to understand and interpret the trend analysis. This case enables students to evaluate the financial performance of the company by analyzing financial statements of the company from year 2003 to 2008. The pedagogical objectives are to enable students to understand: (1) how the financial health of a company can be evaluated and what are the parameters for assessing it; (2) and introduce the students to financial performance evaluation tools like financial ratio analysis and common size statements; and (3) and to evaluate the performance over a period of time by applying trend analysis. This case has been used in financial accounting courses, particularly in financial statement analysis and as an introductory case in financial management. The case assumes the students to have basic knowledge of basic financial accounting concepts.

Topics

Financial fitness; Financial health; Financial statement analysis; Emaar Properties PJSC and subsidiaries; Trend analysis; Ratio analysis; UAE Real Estate Company; Common size statements; Du Pont analysis; Real estate industry; Dubai company
Location:
Size:
Revenue AED16,015,133
Other setting(s):
Five years - 31 December 2003 to 31 December 2008 financial statements

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