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

Abstract

The case analyses the financial performance of three United Arab Emirates (UAE) cement companies - Gulf Cement Company (GCC), Union Cement Company (UCC) and Ras Al Khaimah Cement Company (RAKCC). UAE cement sector has seen unprecedented growth in the past few years on account of the booming real estate sector. But with the recent economic downturn and the liquidity crunch, several real estate projects have been put on hold or scrapped altogether leading to a slow down in the construction sector. For the GCC, which is one of the largest cement manufacturers in United Arab Emirates and in the Gulf region, the net profit in year 2008 has deteriorated from AED 413,822,606 to AED 2,118,827 and the earnings per share (EPS) has come down drastically from AED 0.500 to AED 0.003. The net profit of UCC has also decreased slightly from AED 172,499,000 to AED 155,409,000 in year 2008 whereas RAKCC emerged as one of the major gainers even in the downturn. RAKCC has shown a whopping increase in net profit from AED 54,935,327 to AED 80,040,287 and EPS has increased to AED 0.17 in 2008 from AED 0.11 in 2007. The case provides the information regarding balance sheet, income statement and cash flow statement for two years - 2008 and 2007. The case gives an opportunity to the students to conduct financial statement analysis of these companies by making cross sectional and time series analysis. The case enables the students to understand the application of ratios analysis to draw interpretations as to why GCC and UCC performance is deteriorating while RAKCC has managed to give good results even in the downturn. The case also emphasises the key areas to look into while evaluating the company''s financial health. The case requires the students to figure out the areas of red alert while looking into companies'' financial fitness. The case enables the students to compare and contrast the financial statements of different companies with the help of common size statements. The case assumes the students to have basic accounting knowledge. The case has been used as an introductory case in the financial statement analysis.

Topics

Financial performance evaluation; Financial statement analysis; Cross section financial statement analysis; Ratio analysis; DuPont analysis; UAE Cement Company; Dubai cement companies; Gulf Cement Company; Union Cement Company; RAK Cement Company; Common size cements
Location:
Industry:
Size:
Turnover AED1,078,139,939
Other setting(s):
31 December 2008 and 2007 financial statements

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