Aldar Properties PJSC and Abu Dhabi Securities Exchange

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This analysis paper deals with selecting two companies from two different countries and industries and evaluating the similarities and differences in the way balance sheet of these companies are presented in their annual reports. The comparison is not just limited to the layout of the balance sheets but also will extend to the comparison of accounting policies which these companies have used to draw figures for different elements of their balance sheets. Moreover, it will discuss difficulties faced by investor for his / her investment decision related to these companies.

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Selection of Companies

For the purpose of this paper, I selected two companies 1) Aldar Properties PJSC (Aldar) that is a well-established property development, investment and management company based in Abu Dhabi and it is listed on Abu Dhabi Securities Exchange (ADX) (Aldar 2009) 2) Caltex Australia (Caltex) that is involved in marketing and distribution of oil related products and it is listed on Australian Stock Exchange (ASE) (Caltex 2009). The balance sheet of Aldar was retrieved from the company’s website http://www.aldar.com/welcome_to_aldar.en and that of Caltex was retrieved from its corporate website http://www.caltex.com/corp/en/default.asp.

Reasons for Selection

The reason for selecting these two companies is their sheer size and operations which makes them one of the leading companies in their respective industries. The two companies are operating in two different sectors and the extent of their operations varies significantly. Also the reason they are operating under different accounting regulatory frameworks which would allow comparisons between both the balance sheets of two companies more interesting and comprehensive.

Similarities in Balance Sheets

Upon examination of balance sheets of both companies similarities could be identified. Both balance sheets provide assets details before liabilities and equity and both companies have their year ends in December of every year. Both companies record their property, plant and equipment at historical costs less accumulated depreciation and any impairment losses incurred by the company. The balance sheet provides notes to different elements of balance sheet which provide details of what constitute figures disclosed under different headings in the balance sheet. Also balance sheets provide aggregates of assets, liability and equity.

Differences in Balance Sheets

The major difference between balance sheets of both companies is that assets, liabilities and equity of Aldar have been recorded on the basis of accounting standards and policies laid out by International Accounting Standard Board (IASB) as International Financial Reporting Standards (IFRSs) (Aldar 2007)whereas on the other hand Caltex prepares its financial statement in accordance with the Australian Accounting Standards (AAS) issued by Australian Accounting Standards Board (AASB) (Caltex 2008). Furthermore, the layout of balance sheets is different. Aldar’s balance sheet has non-current assets before current assets and equity that is referred to as Capital and Reserves is provided before company’s liabilities. On the other hand Caltex’s balance sheet has current assets before non-current assets and liabilities are disclosed before equity in the layout. Another difference between both balance sheets is that Caltex not only provides consolidated balance sheet but also enhances comparability by providing relevant information for the parent company as well. The terms used for referring to different elements of the balance sheet differ in both reports.

Difficulties in Investment Decision

Investors decide regarding their investment in companies based on the information that has been provided by companies in the annual reports or quarterly reports. In addition to this information the investment decisions are also influenced by any corporate news including those related to the management of the company, business activity or any other issue which could have impact on the future being of the company. As investors are becoming aware of the investment opportunities available in the international markets and accessibility is much easier than ever before they seek information which could actually help them making quick and correct decisions. The obvious source as mentioned is the annual report of the company which incorporates four main financial statements and other supporting information. However, the use of such information is not an easy task and investors seek out assistance from independent analysts and fund managers. The major difficulty with the use of information provided in the financial reports is the lack of understanding by investors. Investors do not usually possess relevant skills; knowledge and general know how what to look for in financial reports and what tools they should implement to make such information more meaningful to them. The selected companies operate in two different countries in which accounting profession is governed by different set of standards which makes understanding of financial information much more complex. Comparisons between companies would surely not be an easy task as it would involve foreign currency translation to the one in which the investor wishes to deal in. In addition to these reasons the availability of regular information on the investment is sometimes difficult to access if the investor is not residing in the same country as these companies are. This is the reason that they rely more on the information provided by analysts and daily announcements made on the floor of capital markets.

List of References

Aldar, 2007. Aldar Properties PJSC Reports and Accounts 2007. Annual Report. Abu Dhabi: Aldar Properties PJSC.

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Aldar, 2009. Home. [Online] Web.

Caltex, 2008. 2008 Annual Report. Annual Report. Melbourne: Caltex.

Caltex, 2009. Welcome to Caltex. [Online] Web.

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BusinessEssay. (2022, February 11). Aldar Properties PJSC and Abu Dhabi Securities Exchange. Retrieved from https://business-essay.com/aldar-properties-pjsc-and-abu-dhabi-securities-exchange/

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BusinessEssay. (2022, February 11). Aldar Properties PJSC and Abu Dhabi Securities Exchange. https://business-essay.com/aldar-properties-pjsc-and-abu-dhabi-securities-exchange/

Work Cited

"Aldar Properties PJSC and Abu Dhabi Securities Exchange." BusinessEssay, 11 Feb. 2022, business-essay.com/aldar-properties-pjsc-and-abu-dhabi-securities-exchange/.

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BusinessEssay. (2022) 'Aldar Properties PJSC and Abu Dhabi Securities Exchange'. 11 February.

References

BusinessEssay. 2022. "Aldar Properties PJSC and Abu Dhabi Securities Exchange." February 11, 2022. https://business-essay.com/aldar-properties-pjsc-and-abu-dhabi-securities-exchange/.

1. BusinessEssay. "Aldar Properties PJSC and Abu Dhabi Securities Exchange." February 11, 2022. https://business-essay.com/aldar-properties-pjsc-and-abu-dhabi-securities-exchange/.


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BusinessEssay. "Aldar Properties PJSC and Abu Dhabi Securities Exchange." February 11, 2022. https://business-essay.com/aldar-properties-pjsc-and-abu-dhabi-securities-exchange/.