Starhill REIT Financial Analysis - 2083 Words

1. PROFITABILITY Return on Ordinary Shareholders’ Funds (ROSF) ROSF examines the profit a business generates with the shareholders’ funds. The ROSF of Starhill Real Estate Investment Trust (hereinafter refer as Starhill REIT) raised steeply in year 2009 from 7.09% to 27.73%, an increase of 20.64% compared to previous year. The remarkable increment of the percentage was conducing by the growth of income after taxation in year 2009. Included in income after taxation was a revaluation surplus of RM274.36 million required to be made under fair value accounting standards. Meanwhile, the growth in recurring profit was contributed substantially by increased in service charge rates for all tenancies in the retail complexes. This showing a good†¦show more content†¦Therefore it might be the company policy to change the trade term and insufficient of information is available for analysis. Sales Revenue to Capital Employed Sales revenue to capital employed indicates how effectively the assets of a business are being used to generate sales revenue. The ratio of Starhill REIT decreased from the year 2008 to the year 2010, which was 0.081times, 0.075 times, and 0.074 times respectively. This implied that assets were not being used productively in generate revenue. (Approximately 8 cent only was being generated for each RM1 of capital employed.) The reduction of ratio over the years was attributed to the increased of capital employed. 3. LIQUIDITY Current Ratio and Acid Test Ratio Current Ratio assesses whether the business has enough short-term assets to cover its short-term debts. The acid test ratio is quite similar to the current ratio yet excluding stock. In this case as Starhill REIT do not has stock therefore the calculation for both of the ratios will be the same. The ratio increased year by year from 2008 to 2010, i.e. 2.25 times, 2.26 times, and 4.61 times respectively. The ratio indicated that the company had approximately two times of short-term assets to secure its short-term liabilities in 2008 and 2009. In 2010, the ratio boosted up and it was doubled compared to prior year. This was due to the increment of other receivables amounted to RM625 million (cash proceeds from the disposal)