The GCC region has been undergoing a transformation due to a surge of construction activities in recent times. This has led to a mushrooming of real estate developers; some of whom have gone public, and are listed on the stock exchanges. Real estate is the driver of the parallel non-oil economy, and therefore it is important for the stakeholders to have sufficient awareness of the financial performance of these firms. While the financial ratios of these firms can be easily derived from the financial statements, there do not exist any official benchmarks to compare the ratios. This pilot study aims to fill this gap by creating rudimentary benchmarks for 30 financial ratios based on financial statements of all the 30 companies listed on the GCC bourses. The study was initially meant to cover UAE firms, but was extended to cover the GCC due to the limited number of listed firms in the UAE. This extension was made on the assumption that the GCC countries have similar economies. The benchmarks for 30 financial ratios for 2006-08 are presented and one ratio: the return on capital employed (ROCE), is analysed in detail. The study confirms the hypothesis that the ROCE data is statistically similar among the selected firms of the GCC for the three study years 2006-08, and it is envisaged that the benchmarks created for the other 29 financial ratios may be used across the GCC with limited prudence. The study shows that there are statistically significant variances due to size effects; the study does not consider country effects due to limitations of data. The study also shows that, in terms of ROCE, all the companies fared better in 2007 than 2006 and poorly in 2008; and that the smaller companies went through wild swings in terms of ROCE during the study period.

Pilot Study - Financial Ratio Benchmarks for Real Estate Companies of the G.C.C. - Mahesh N Butani PDF

The list of books you might like