Real Estate Research Paper Sample
The ratios of these five real estate firms represent the measure of the degree or extent of financial leverage that a firm may seek to utilize. It can be defined as the ratio that exists amid the sum of liabilities, as well as equity of the shareholders’. One must know and grasp that even though the expressions debt, together with liabilities may be utilized interchangeably. There are certain key variations between the two terms. These variations led to the uprising of popular discrepancies of the formula (Fattah, 2012). In general, a person may say that these five companies possess a high ratio, and could find it quite difficult to avert insolvency in the scenario of being incapable of paying back the interest accrued on the loan, or release their financial duties.
Analysis and comparison to the globe
Having critically analyzed the excel spreadsheet data and the generated graphs, it is crucial to know that these firms try to signify and analyze the financial strengths and abilities. A firm’s debt/equity ratio may be related with its ratio from the past years to determine the changes in the real estate capital structure (Loth, 2013). On making comparisons of the company’s debt/equity ratio with that of the industry yardstick or that of the debt/equity ratio of these five companies, one can evaluate the scale to which the company is utilizing leverage to get a view on the extent of risk accepted by these five companies.
UAE, just like many countries, sometimes experiences financial crises. Some of the cities, from the research made, badly suffered both in business and financially. Real estate is a major financial sector in the UAE because these companies have made major and crucial investments towards the aspect of property development. This is to aid in execution of residential, commercial and industrial requirements of locals and foreign entrepreneurs (Peter, 2006). During the global recession, numerous persons became unemployed and a great number of expatriates returned to their countries. The market experienced an oversupply and yet the buyers were few. The global economic recession made the prices to fall.
In accordance to recent reports in UAE, they signified gradual recovery the year 2011 and began regaining its momentum. At the first stage of the recovery, the property market indicated steadiness in property, prices and rents. The market regained its previous progressing pattern and began to signify a substantial rise in the prices of property in certain prime locations of the UAE. Hence, it can be expected that asset market will obtain an enormous supply of high and residential units this year (Peter, 2006). This can be a crucial setback for the asset market.
Conclusion
A company having higher amounts of debts, as well as fiscal duties out of the five companies is more likely to experience failure to pay the debts. These ratios are of minute utility when in isolation. To come up with meaningful conclusions concerning the financial health trend when compared to international real estate markets in Europe, the analysis of both trend and the industry needs to be executed. The analysis will tell how best the financial stand can be managed (Drake, 2012). Having the record of financial ratio trends of these five companies in the UAE over the past years as illustrated in the excel worksheet, will show ultimately if the financial stand of a company is increasing or decreasing over time.