Westfield Corporation Vs Vornado Realty Trust – Comparative Analysis
- December 27, 2023/ Uncategorized
Westfield Corporation
Westfield corporation is considered as the Australian Based British American Shopping centre company that transacts with the retail destinations in England and United States. The company was created in the year 2014 when the company separated its Australian and New Zealand business operations from the international operators (Corp 2017). The operations of the company is based on the development, construction, asset management of property and marketing activities of its centres. The company is listed on the ASX and possess a portfolio on the shopping centre that includes approximately investment interest in around 40 shopping centres around the world and encompasses around 7,500 retail outlets with total amount asset management exceeding $28.5 billion.
Vornado Realty Trust is regarded as the real estate investment trust having its base in the New York City. The company usually invest in offices buildings and street retail in Manhattan (Vornado 2017). The origins of the organization can be traced back to the phase of Two Guys discount store that was founded in the year 1947 by the brothers in Sidney and Herbart Hubschman. In the year 1959 the two guy acquired O.A Sutton Corporation, manufacturers of Vornado line of electric fans and the organization was then renamed as the Vornado Inc.
The above stated graph provides a comparative result of the total amount of return for Vernado Reality Trust in respect of the cumulative total return under the S&P 500 stock index and the S&P 500 consumer Discretionary Sector for the period commencing from the year 2012 to 2017, being the last day of the 2014 financial year graph. The graph takes into the considerations the value of the investment in their common stock and each index stood $100 at the 7th November 2009 with the amount of dividends were reinvested.
Considering the trend of the above stated analysis it can be stated that Westfield Corporation Ltd has reported a positive trend while Vornado Realty has reported a declining trend in the areas of gross margin over the period of three years. Whereas the Westfield Corporation Ltd has reported a higher gross margin over the period of three years. The earnings per share of the Westfield corporation reported to be stable with better operating margin in the span of three years.
Vertical Analysis: Balance Sheet Analysis
Westfield Corporation Ltd
|
Vertical Analysis for Balance Sheet |
||||||
|
Accounts |
2014 |
2015 |
2016 |
|||
|
Assets |
||||||
|
Real estate properties |
264 |
-27% |
95 |
-64% |
199 |
109% |
|
Accumulated depreciation |
-170 |
-22% |
-100% |
|||
|
Real estate properties, net |
94 |
-35% |
95 |
1% |
199 |
109% |
|
Cash and cash equivalents |
376 |
-67% |
1515 |
303% |
404 |
-73% |
|
Receivables |
221 |
-62% |
336 |
52% |
287 |
-15% |
|
Intangible assets |
182 |
|||||
|
Other assets |
20629 |
-38% |
22120 |
7% |
24862 |
12% |
|
Total assets |
21321 |
-39% |
24066 |
13% |
25934 |
8% |
|
Liabilities and stockholders’ equity |
||||||
|
Liabilities |
||||||
|
Short-term borrowing |
150 |
4900% |
4 |
-97% |
1044 |
26000% |
|
Long-term debt |
6430 |
-48% |
7156 |
11% |
7271 |
2% |
|
Capital leases |
40 |
-9% |
55 |
38% |
55 |
0% |
|
Payables and accrued expenses |
1139 |
-32% |
1049 |
-8% |
1039 |
-1% |
|
Other liabilities |
4132 |
-29% |
3073 |
-26% |
3327 |
8% |
|
Total liabilities |
11892 |
-40% |
11337 |
-5% |
12736 |
12% |
|
Stockholders’ equity |
||||||
|
Common stock |
13971 |
-5% |
15659 |
12% |
15788 |
1% |
|
Retained earnings |
-4366 |
-660% |
-2429 |
-44% |
-1285 |
-47% |
|
Accumulated other comprehensive income |
-176 |
-57% |
-502 |
185% |
-1305 |
160% |
|
Total stockholders’ equity |
9429 |
-38% |
12729 |
35% |
13198 |
4% |
|
Total liabilities and stockholders’ equity |
21321 |
100% |
24066 |
100% |
25934 |
100% |
|
Income Statement Analysis |
||||||
|
2014 |
%change |
2015 |
%change |
2016 |
%change |
|
|
Revenue |
998 |
58% |
1703 |
71% |
1566 |
-8% |
|
Expenses |
||||||
|
Operating expenses |
625 |
318% |
-110 |
-118% |
-49 |
-55% |
|
Total expenses |
625 |
318% |
-110 |
-118% |
-49 |
-55% |
|
Operating income |
373 |
86% |
1814 |
386% |
1615 |
-11% |
|
Interest income |
10 |
62% |
7 |
-30% |
26 |
271% |
|
Interest expenses |
398 |
50% |
141 |
-65% |
84 |
-40% |
|
Other income (expense) |
4 |
0% |
4 |
0% |
-100% |
|
|
Income before income taxes |
-9.9 |
101% |
1230 |
-12524% |
1643.3 |
34% |
|
Provision for income taxes |
250 |
12% |
-1496 |
-698% |
383 |
-126% |
|
Other income |
0 |
|||||
|
Net income from continuing operations |
-262 |
116% |
3180 |
-1314% |
1888 |
-41% |
|
Net income |
-262 |
116% |
3180 |
-1314% |
1888 |
-41% |
|
Vertical Analysis for the Income Statement of Vornado Realty Trust (all amounts in thousand except except unit, share and per share amount) |
|||
|
Accounts |
2014 |
2015 |
2016 |
|
Revenue |
|||
|
Property rental |
$ 1,911,487.00 |
$ 2,076,856.00 |
$ 2,103,728.00 |
|
Tenant expenses reimbursements |
$ 245,819.00 |
$ 260,976.00 |
$ 260,667.00 |
|
Fee and other income |
$ 155,206.00 |
$ 164,705.00 |
$ 141,807.00 |
|
Total Revenue |
$ 2,312,512.00 |
$ 2,502,537.00 |
$ 2,506,202.00 |
|
Expenses: |
|||
|
Operating |
$ 953,611.00 |
$ 1,011,249.00 |
$ 1,024,336.00 |
|
Depreciation and amortization |
$ 481,303.00 |
$ 542,952.00 |
$ 565,059.00 |
|
General and administrative |
$ 169,270.00 |
$ 175,307.00 |
$ 179,279.00 |
|
Skyline properties impairment loss |
$ – |
$ – |
$ 160,700.00 |
|
Acquisition and transation related costs |
$ 18,435.00 |
$ 12,511.00 |
$ 26,037.00 |
|
Total expenses |
$ 1,622,619.00 |
$ 1,742,019.00 |
$ 1,955,411.00 |
|
Operating income |
$ 689,893.00 |
$ 760,248.00 |
$ 550,791.00 |
|
(Loss) income from real estate fund investments |
$ 163,034.00 |
$ 74,081.00 |
$ (23,602.00) |
|
Income (loss) from partially owned entities |
$ (59,861.00) |
$ (12,630.00) |
$ 165,389.00 |
|
Interest and other investment income, net |
$ 38,752.00 |
$ 26,978.00 |
$ 29,546.00 |
|
Interest and debt expense |
$ (412,755.00) |
$ (378,025.00) |
$ (402,674.00) |
|
Net gain on extinguishment of Skyline properties debt |
$ – |
$ – |
$ 487,877.00 |
|
Net gain on disposition of wholly owned and partially owned assets |
$ 13,568.00 |
$ 251,821.00 |
$ 175,735.00 |
|
Net income before taxes |
$ 432,631.00 |
$ 722,473.00 |
$ 983,062.00 |
|
Income Tax (Expenses) benefit |
$ (9,281.00) |
$ 84,695.00 |
$ (8,312.00) |
|
Net income from continuing operations |
$ 423,350.00 |
$ 807,168.00 |
$ 974,750.00 |
|
Inome from Discontinued Operations |
$ 585,676.00 |
$ 52,262.00 |
$ 7,172.00 |
|
Net Income |
$ 1,009,026.00 |
$ 859,430.00 |
$ 981,922.00 |
|
Less net income attributable to noncontrolling interests in: |
|||
|
Consolidated subsidiaries |
$ (96,561.00) |
$ (55,765.00) |
$ (21,351.00) |
|
Operating Partnership |
$ (47,613.00) |
$ (43,231.00) |
$ (53,654.00) |
|
Net income attributable to Vornado |
$ 864,852.00 |
$ 760,434.00 |
$ 906,917.00 |
|
Preferred share dividends |
$ (81,464.00) |
$ (80,578.00) |
$ (75,903.00) |
|
Preferred share issuance costs (Series J redemption) |
$ – |
$ – |
$ (7,408.00) |
|
Net Income attributable to common shareholders |
$ 783,388.00 |
$ 679,856.00 |
$ 823,606.00 |
|
Accounts |
2014 |
Percentage |
2015 |
Percentage |
2016 |
Percentage |
|
|
Assets: |
|||||||
|
Land |
$ 3,861,913.00 |
18.25% |
$ 4,164,799.00 |
19.70% |
$ 4,065,142.00 |
19.53% |
|
|
Buildings and improvements |
$ 11,705,749.00 |
55.33% |
$ 12,582,671.00 |
59.51% |
$ 12,727,980.00 |
61.15% |
|
|
Development costs and construction in progress |
$ 1,128,037.00 |
5.33% |
$ 1,226,637.00 |
5.80% |
$ 1,430,276.00 |
6.87% |
|
|
Leasehold improvements and equipment |
$ 126,659.00 |
0.60% |
$ 116,030.00 |
0.55% |
$ 116,560.00 |
0.56% |
|
|
Total |
$ 16,822,358.00 |
79.51% |
$ 18,090,137.00 |
85.56% |
$ 18,339,958.00 |
88.11% |
|
|
Less accumulated depreciation and amortization |
$ (3,161,633.00) |
-14.94% |
$ (3,418,267.00) |
-16.17% |
$ (3,513,574.00) |
-16.88% |
|
|
Real estate, net |
$ 13,660,725.00 |
64.57% |
$ 14,671,870.00 |
69.39% |
$ 14,826,384.00 |
71.23% |
|
|
Cash and cash equivalents |
$ 1,198,477.00 |
5.66% |
$ 1,835,707.00 |
8.68% |
$ 1,501,027.00 |
7.21% |
|
|
Restricted cash |
$ 176,204.00 |
0.83% |
$ 107,799.00 |
0.51% |
$ 98,295.00 |
0.47% |
|
|
Marketable securities |
$ 206,323.00 |
0.98% |
$ 150,997.00 |
0.71% |
$ 203,704.00 |
0.98% |
|
|
Tenant and other receivables, net of allowance for doubtful accounts of $10920 and $11,908 |
$ 109,998.00 |
0.52% |
$ 98,062.00 |
0.46% |
$ 94,467.00 |
0.45% |
|
|
Investments in partially owned entities |
$ 1,240,489.00 |
5.86% |
$ 1,550,422.00 |
7.33% |
$ 1,428,019.00 |
6.86% |
|
|
Real estate fund investments |
$ 513,973.00 |
2.43% |
$ 574,761.00 |
2.72% |
$ 462,132.00 |
2.22% |
|
|
Receivable arising from the straight-lining of rents, net of allowance of $2227 and $2751 |
$ 787,271.00 |
3.72% |
$ 931,245.00 |
4.40% |
$ 1,032,736.00 |
4.96% |
|
|
Deferred leasing costs, net of accumulated amortization of $228,862 and $218,239 |
$ 382,433.00 |
1.81% |
$ 480,421.00 |
2.27% |
$ 454,345.00 |
2.18% |
|
|
Identified intangible assets, net of accumulated amortization of $207,330 and $187,360 |
$ 225,155.00 |
1.06% |
$ 227,901.00 |
1.08% |
$ 192,731.00 |
0.93% |
|
|
Assets related to discontinued operations |
$ 2,234,128.00 |
10.56% |
$ 37,020.00 |
0.18% |
$ 5,570.00 |
0.03% |
|
|
Other assets |
$ 422,804.00 |
2.00% |
$ 477,088.00 |
2.26% |
$ 515,437.00 |
2.48% |
|
|
Total assets |
$ 21,157,980.00 |
100.00% |
$ 21,143,293.00 |
100.00% |
$ 20,814,847.00 |
100.00% |
|
|
Liabilities, redeemable noncontrolling interests and equity |
|||||||
|
Mortgages payable,net |
$ 8,187,843.00 |
38.70% |
$ 9,513,713.00 |
45.00% |
$ 9,278,263.00 |
44.58% |
|
|
Senior unsecured notes, net |
$ 1,342,494.00 |
6.35% |
$ 844,159.00 |
3.99% |
$ 845,577.00 |
4.06% |
|
|
Unsecured revolving credit facilities |
$ – |
0.00% |
$ 550,000.00 |
2.60% |
$ 115,630.00 |
0.56% |
|
|
Unsecured term loan, net |
$ – |
$ 183,138.00 |
0.87% |
$ 372,215.00 |
1.79% |
||
|
Accounts payable and accrued expenses |
$ 447,745.00 |
2.12% |
$ 443,955.00 |
2.10% |
$ 458,694.00 |
2.20% |
|
|
Deferred revenue |
$ 358,613.00 |
1.69% |
$ 346,119.00 |
1.64% |
$ 287,846.00 |
1.38% |
|
|
Deferred compensation plan |
$ 117,284.00 |
0.55% |
$ 117,475.00 |
0.56% |
$ 121,374.00 |
0.58% |
|
|
Liabilities related to discontinued operations |
$ 1,501,009.00 |
7.09% |
$ 12,470.00 |
0.06% |
$ 2,870.00 |
0.01% |
|
|
Other liabilities |
$ 375,830.00 |
1.78% |
$ 426,965.00 |
2.02% |
$ 435,436.00 |
2.09% |
|
|
Total Liabilities |
$ 12,330,818.00 |
58.28% |
$ 12,437,994.00 |
58.83% |
$ 11,917,905.00 |
57.26% |
|
|
Commitments and contingencies |
|||||||
|
Redeemable noncontrolling interests: |
|||||||
|
Class A units- 12,197,162 and 12,242,820 units outstanding |
$ 1,336,780.00 |
6.32% |
$ 1,223,793.00 |
5.79% |
$ 1,273,018.00 |
6.12% |
|
|
Series D cumulative redeemable preferred units-177,101 units outstading |
$ 1,000.00 |
0.00% |
$ 5,428.00 |
0.03% |
$ 5,428.00 |
0.03% |
|
|
Total redeemable noncontrolling interests |
$ 1,337,780.00 |
6.32% |
$ 1,229,221.00 |
5.81% |
$ 1,278,446.00 |
6.14% |
|
|
Vornado shareholders’ equity: |
0.00% |
0.00% |
|||||
|
Preferred shares of beneficial interes: no par value per share: authorized 110,000,000 shares: issued and outsdading 42,824,829 and 52,676629 |
$ 1,277,026.00 |
6.04% |
$ 1,276,954.00 |
6.04% |
$ 1,038,055.00 |
4.99% |
|
|
Common shares of beneficial interest: $.04 par value per share; authorized 250,000,000 shares; issued and outstanding 189,100,876 and 188,576,853 shares |
$ 7,493.00 |
0.04% |
$ 7,521.00 |
0.04% |
$ 7,542.00 |
0.04% |
|
|
Additional capital |
$ 6,873,025.00 |
32.48% |
$ 7,132,979.00 |
33.74% |
$ 7,153,332.00 |
34.37% |
|
|
Earnings less than distributions |
$ (1,505,385.00) |
-7.11% |
$ (1,766,780.00) |
-8.36% |
$ (1,419,382.00) |
-6.82% |
|
|
Accumulated other comprehensive income |
$ 93,267.00 |
0.44% |
$ 46,921.00 |
0.22% |
$ 118,972.00 |
0.57% |
|
|
Total Vornado shareholders’ equity |
$ 6,745,426.00 |
31.88% |
$ 6,697,595.00 |
31.68% |
$ 6,898,519.00 |
33.14% |
|
|
Non controlling interests in consolidated subsidiaries |
$ 743,956.00 |
3.52% |
$ 778,483.00 |
3.68% |
$ 719,977.00 |
3.46% |
|
|
Total stockholders’ equity |
$ 7,489,382.00 |
35.40% |
$ 7,476,078.00 |
35.36% |
$ 7,618,496.00 |
36.60% |
|
|
Total liabilities and stockholders’ equity |
$ 21,157,980.00 |
100.00% |
$ 21,143,293.00 |
100.00% |
$ 20,814,847.00 |
100.00% |
Westfield Corp Ltd
|
Westfield Corp Ltd |
|||
|
Particulars |
Year 2016 |
Year 2015 |
Year 2014 |
|
Current ratio |
0.967 |
1.800 |
0.401 |
|
Acid test ratio |
0.408 |
1.607 |
0.310 |
|
Cash ratio |
0.267 |
1.330 |
0.190 |
|
Accruals ratio |
0.183 |
0.317 |
0.256 |
|
Cash Flow Yield |
-2.585 |
0.367 |
0.405 |
|
Cash Flow to Sales |
0.679 |
0.668 |
0.492 |
|
Cash Flow to Assets |
0.032 |
0.049 |
0.029 |
|
Current Cash Debt Coverage Ratio |
0.480 |
1.025 |
0.359 |
|
Free Cash Flow |
-548.2 |
-616.9 |
-1162.2 |
|
Accounts receivable turnover |
1.04 |
1.39 |
1.11 |
|
Days’ sales outstanding |
147.43 |
59.66 |
72.56 |
|
Accounts payable turnover |
0.22 |
0.21 |
0.16 |
|
Days’ payable outstanding |
75.25 |
18.68 |
16.95 |
|
Inventory turnover |
3.4 |
8.91 |
22.76 |
|
Days’ sales in inventory |
107.3 |
40.97 |
16.04 |
|
Cash Turnover |
2.653 |
1.154 |
3.843 |
|
Fixed Asset Turnover |
8.38 |
18.01 |
10.66 |
|
Total Asset Turnover |
0.04 |
0.08 |
0.06 |
|
Cash Conversion Cycle |
179.48 |
81.95 |
71.65 |
|
Basic Defence Interval |
0.002 |
-0.158 |
0.041 |
|
Expense Coverage Days |
472.8 |
1337.8 |
477.1 |
|
Debt |
0.558 |
0.471 |
0.488 |
|
Equity |
0.442 |
0.529 |
0.512 |
|
Debt to Equity |
1.261 |
0.891 |
0.953 |
|
Times Interest Earned |
-0.146 |
14.222 |
20.541 |
|
Cash Interest Coverage |
9.213 |
10.872 |
7.916 |
|
Cash Debt Coverage |
0.057 |
0.103 |
0.060 |
|
Interest Expense to Total Debt |
0.010 |
0.012 |
0.010 |
|
Financial Leverage |
2.26 |
1.89 |
1.97 |
|
Gross Profit Margin |
54.1 |
43.8 |
37.5 |
|
Operating Profit Margin |
37.4 |
106.5 |
103.1 |
|
Pre-Tax Profit Margin |
-0.012 |
0.963 |
1.464 |
|
Net Profit Margin |
-26.26 |
186.73 |
120.58 |
|
Return on Total Assets |
-0.93 |
14.01 |
7.55 |
|
Return on Common Equity |
-2.14 |
28.71 |
14.56 |
|
Book Value for Common Share |
3.11 |
3.63 |
4.32 |
|
Market Capitalization |
18744 |
19763 |
12630 |
|
Effective Tax Rate |
-3.03% |
2.44% |
3.04% |
|
Basic Earnings per Share |
-0.14 |
3.61 |
4.18 |
|
Price-Earnings |
-1.043 |
0.092 |
0.151 |
|
Price-Sales |
18.782 |
11.605 |
8.065 |
|
Price-Book |
0.047 |
0.038 |
0.031 |
|
Dividend Payout |
227.9 |
29.4 |
22.3 |
|
Dividend Yield |
1.781 |
2.388 |
2.509 |
|
Dividend Coverage |
-0.538 |
4.576 |
2.647 |
|
Current liability ratio |
0.119 |
0.100 |
0.168 |
|
Inventory to Sales Ratio |
NA |
NA |
NA |
|
Cash to Current Assets Ratio |
0.276 |
0.739 |
0.473 |
|
Current Assets to Total Debt Ratio |
0.170 |
0.209 |
0.074 |
|
Current Liabilities to Inventory Ratio |
NA |
NA |
NA |
|
Top compensation to sales |
22471.88 |
20982.21 |
25057.48 |
Vornado Realty Trust
Ratio Analysis
|
Vornado Realty Trust |
|||
|
Ratio Analysis |
|||
|
Year 2016 |
Year 2015 |
Year 2014 |
|
|
Current ratio |
5.94 |
6.69 |
5.074 |
|
Acid test ratio |
5.944 |
6.6962 |
5.074 |
|
Cash ratio |
3.4866 |
4.377 |
3.0702 |
|
Accruals ratio |
2.4574 |
2.3184 |
2.0639 |
|
Cash Flow Yield |
1.1033 |
0.8839 |
1.3127 |
|
Cash Flow to Sales |
0.3922 |
0.2686 |
0.4909 |
|
Cash Flow to Assets |
0.047 |
0.0317 |
0.0551 |
|
Current Cash Debt Coverage Ratio |
2.2171 |
1.5075 |
1135310/(447745+x/2) |
|
Free Cash Flow |
741595 |
-1256492 |
-749631 |
|
Accounts receivable turnover |
2.3243 |
2.597 |
2312512/(897269+x/2) |
|
Days’ sales outstanding |
164.16 |
150.14 |
141.62 |
|
Accounts payable turnover |
2.2696 |
2.2681 |
953611/(447745+x/2) |
|
Days’ payable outstanding |
163.44 |
160.24 |
171.37 |
|
Inventory turnover |
NA |
NA |
NA |
|
Days’ sales in inventory |
NA |
NA |
NA |
|
Cash Turnover |
1.4148 |
1.5082 |
2318512/(1374681+x)/2 |
|
Fixed Asset Turnover |
0.1699 |
0.1766 |
2312512/(13660725+x/2) |
|
Total Asset Turnover |
0.1194 |
0.1183 |
0.1123 |
|
Cash Conversion Cycle |
NA |
NA |
NA |
|
Basic Defense Interval |
741.53 |
2026.5 |
760.06 |
|
Expense Coverage Days |
422.02 |
511.81 |
407.42 |
|
Debt |
12637882 |
13216477 |
13074774 |
|
Equity |
7618496 |
7476078 |
7489382 |
|
Debt to Equity |
1.6588 |
1.7678 |
1.7457 |
|
Times Interest Earned |
3.4413 |
2.9111 |
2.048 |
|
Cash Interest Coverage |
3.3328 |
2.709 |
2.6433 |
|
Cash Debt Coverage |
0.072 |
0.055 |
669008/(13074774+x/2) |
|
Interest Expense to Total Debt |
0.0379 |
0.034 |
0.0433 |
|
Financial Leverage |
|||
|
Gross Profit Margin |
0.591 |
0.5958 |
0.5876 |
|
Operating Profit Margin |
0.2197 |
0.3038 |
0..2983 |
|
Pre-Tax Profit Margin |
0.5529 |
0.4398 |
0.3655 |
|
Net Profit Margin |
0.3618 |
0.2823 |
0.3739 |
|
Return on Total Assets |
0.0432 |
0.0359 |
0.042 |
|
Return on Common Equity |
0.1101 |
0.0908 |
0.1038 |
|
Book Value for Common Share |
7618496/189.10M |
7476078/188.58M |
7489382/187.89M |
|
Market Capitalization |
|||
|
Effective Tax Rate |
0.59% |
7.69% |
1.10% |
|
Basic Earnings per Share |
4.36 |
3.61 |
4.18 |
|
Price-Earnings |
|||
|
Price-Sales |
|||
|
Price-Book |
|||
|
Dividend Payout |
0.7571 |
0.8655 |
0.983 |
|
Dividend Yield |
|||
|
Dividend Coverage |
|||
|
Current liability ratio |
0.0362 |
0..0335 |
0.0342 |
|
Inventory to Sales Ratio |
NA |
NA |
NA |
|
Cash to Current Assets Ratio |
0.5865 |
0.6537 |
0.605 |
|
Current Assets to Total Debt Ratio |
0.2569 |
0.268 |
0.2383 |
|
Current Liabilities to Inventory Ratio |
NA |
NA |
NA |
|
Top compensation to sales |
12.107 |
10.83 |
11.29 |
Horizontal Analysis Westfield Corp Ltd
|
Accounts |
Percentage Change |
|
|
2016-2015 |
2016-2014 |
|
|
Cash |
-74% |
-6% |
|
Total Current Assets |
-59% |
-81% |
|
Total Assets |
7% |
7% |
|
Total Current Liabilities |
85% |
25% |
|
Total Liabilities |
11% |
-7% |
|
Retained Earnings |
-47% |
-240% |
|
Total Stockholders’ Equity |
3% |
20% |
|
Number of Shares Outstanding |
0% |
0% |
|
Net Sales |
-12% |
27% |
|
Gross Margin |
-11% |
77% |
|
Operating Margin |
-3% |
64% |
|
Interest Expenses |
-8% |
15% |
|
Net Income |
-41% |
116% |
|
Earnings Per Share |
-40% |
116% |
|
Executive Compensation |
5% |
35% |
|
Horizontal Analysis of Vornado Realty Trust(all amounts in thousand except except unit, share and per share amount) |
|||||||
|
Accounts |
Year ended 31 December |
Dollar Change |
Percentage Change |
||||
|
2014 (A) |
2015 (B) |
2016 ( C) |
2016 – 2015 |
2016 – 2014 |
2016 – 2015 |
2016 – 2014 |
|
|
( $ change C-B) |
($ change C-A) |
($ change C-B) |
($ change C-A) |
||||
|
Cash |
$ 1,374,681.00 |
$ 1,943,506.00 |
$ 1,599,322.00 |
$ (344,184.00) |
$ 224,641.00 |
-17.71% |
16.34% |
|
Total Current Assets |
$ 2,271,950.00 |
$ 2,972,813.00 |
$ 2,726,525.00 |
$ (246,288.00) |
$ 454,575.00 |
-8.28% |
20.01% |
|
Total Assets |
$ 21,157,980.00 |
$ 21,143,293.00 |
$ 20,814,847.00 |
$ (328,446.00) |
$ (343,133.00) |
-1.55% |
-1.62% |
|
Total Current Liabilities |
$ 447,745.00 |
$ 443,955.00 |
$ 458,694.00 |
$ 14,739.00 |
$ 10,949.00 |
3.32% |
2.45% |
|
Total Liabilities |
$ 13,074,774.00 |
$ 13,216,477.00 |
$ 12,637,882.00 |
$ (578,595.00) |
$ (436,892.00) |
-4.38% |
-3.34% |
|
Retained Earnings |
$ (1,505,385.00) |
$ (1,766,780.00) |
$ (1,419,382.00) |
$ 347,398.00 |
$ 86,003.00 |
-19.66% |
-5.71% |
|
Total Stockholders’ Equity |
$ 6,745,426.00 |
$ 6,697,595.00 |
$ 6,898,519.00 |
$ 200,924.00 |
$ 153,093.00 |
3.00% |
2.27% |
|
Number of Common Shares Outstanding |
1878,87,498.00 |
1885,76,853.00 |
1891,00,876.00 |
524023 |
1213378 |
0.28% |
0.65% |
|
Net/Sales Revenue |
$ 2,312,512.00 |
$ 2,502,267.00 |
$ 2,506,202.00 |
$ 3,935.00 |
$ 193,690.00 |
0.16% |
8.38% |
|
Cost of Goods Sold |
$ 953,611.00 |
$ 1,011,249.00 |
$ 1,024,336.00 |
$ 13,087.00 |
$ 70,725.00 |
1.29% |
7.42% |
|
Gross Margin |
58.76% |
59.59% |
59.13% |
$ (0.00) |
$ 0.00 |
-0.77% |
0.62% |
|
Operating Expenses |
$ 669,008.00 |
$ 730,770.00 |
$ 931,075.00 |
$ 200,305.00 |
$ 262,067.00 |
27.41% |
39.17% |
|
Operating Margin |
29.83% |
30.38% |
21.98% |
$ (0.08) |
$ (0.08) |
-27.66% |
-26.33% |
|
Interest Expenses |
$ 412,755.00 |
$ 378,025.00 |
$2,018 |
$ (376,007.00) |
$ (410,737.00) |
-99.47% |
-99.51% |
|
Net Income attributable to common shareholders |
$ 783,388.00 |
$ 679,856.00 |
$823,606 |
$ 143,750.00 |
$ 40,218.00 |
21.14% |
5.13% |
|
Earnings Per Share |
4.18 |
3.61 |
4.36 |
$ 0.75 |
$ 0.18 |
20.78% |
4.31% |
|
Executive Compensation |
$ 26,111.48 |
$ 27,116.30 |
$ 30,343.04 |
$ 3,226.75 |
$ 4,231.57 |
11.90% |
16.21% |
On considering the accounts payable of Westfield Ltd it can be stated that the company reported lower accounts payable turnover as the company takes lower number of days in paying of its creditors. Vornado Realty trust reported a higher amount of accounts payable turnover with the company reporting a higher accounts turnover of 2.26 and 2.27 respectively. Westfield has better ability to meet its credit aspects than its counterparts. The accounts receivable turnover of Vornado Realty trust has better over the three years’ period while Westfield corporation reported lower accounts receivable in comparison to its counterpart. The cash flow of Westfield Corporation reported is higher than the Vornado Realty Trust as the company reported a lower cash flow to sales. An important considerations regarding cash flow is that Westfield corporation maintains better liquidity position than Vornado Realty Trust and makes an effective utilization of the company resources.
The fixed on the other hand of Westfield has been rising as the company reported fixed turnover of 18.01 in the year 2015 while its counterpart reported an inefficient fixed asset turnover. This represents that Vornado Realty Trust is ineffective in management of its asset while the Westfield Corporation has effectively managed its assets. Considering the debt of Vornado Realty Trust the company reported a higher proportion of debt than Equity while Westfield corporation has higher proportion of equity than its debt. The long term debt of Westfield corporation has been stable and the short term has been efficiently controlled by the company while proportion of long term debt of Vornado Realty Trust has been significantly higher and might create an impact on the meeting the business obligations during the long run of the operations.
The profitability ratio of the company represents the gross profit margin which stood stable and higher for Westfield corporation as the company reported a gross profit margin of 43.8 and 37.5 in the income year of 2015 and 2016 respectively. While the gross profit margin for Vornado Realty Trust stood significantly lower to 0.59 over the period of three years. On the other hand, earnings per share of the Westfield Corporation Ltd has reported an EPS of marginally stable as over the span of three years the EPS has been somewhat tumultuous for Westfield Corporation. Simultaneously, Vornado Realty Trust reported a significantly higher EPS over the period the three years. Considering the trend of the efficiency ratio it can be stated that Westfield Corporation has reported a rising trend while Vornado Realty Trust has reported a stable trend of efficiency ratio. On considering the accounting policies or methods adopted there does not represents any significant differences between the two companies.
Considering the trend analysis of the Westfield Corporation has reported a positive trend with the company has experienced a positive trend in their gross margin. Additionally, Westfield has reported a stable total asset of 7% for two simultaneous year. The total stockholder equity of the company has represented a positive upward rising trend of 3% and 20% respectively. The net income of the company has represented a significant rise in the period of 2016-2014 as the company reported a net income rise of 116%. Considering the earnings per share of the Westfield Corporation there was a negative trend in the EPS of (40) however it has increased positively to 35% during the trend of 2014-16.
On the other hand, Vornado Realty Trust reported a negative gross margin in the span of 2016-15 since the company reported a negative gross margin of -0.77 and only increased marginally in the span 0.62% with 2014-16. Similarly, the operating margin too reported by the company stood negative during the phase of 2016-15 and 2014-14 with -27.66 and -26.33 respectively. The retained earnings of Vornado Realty Trust stood negative as the company reported a negative earnings of -19.66 and -5.71 respectively. On conducting the comparative trend analysis of both Vornado Realty Trust and Westfield Corporation it can be stated from the results derived that Westfield has performed in a better manner. Westfield Corp Ltd has been more efficient in the areas of gross profit and net profit and this formed the primary reason behind the different result of both the companies.
The current ratio represents the degree to which an organization is better able to meet the short business liabilities. As evident from the analysis it can be stated that the Vornado Realty reported a higher result than Westfield Corp Ltd for the span of three years. As Vornado Realty Trust reported a higher current ratio of higher than 1 which represents that the company has better liquidity to pay its short term obligations. Results derived from the current ratio of Westfield Corp Ltd represents a current lower of lower than 1 and as a result of this the company might struggle to meet its short term business obligations. The reason behind the lower current ratio of Westfield Corp Ltd is because the company has reported a higher current liability in respect of the assets held by the company. Depending upon the results derived from the current ratio investors would generally prefer to invest more on the Vornado realty trust since the company has presented its ability of meeting short term credits.
Trend Analysis
On the basis of the data obtained from the yearly reports an investor would prefer to lend more amount of money to Westfield Corporation instead of investing in Vornado Realty Trust. The reason behind such investment is that Vornado realty trust has high amount of debt than the equity contribution. The company has reported an equity of 7,618,496 while the composition of debt stood 12637882. On the other hand, Westfield Corporation represented a balance sheet asset of $21.1 billion which included the investments of $19.1 billion. Additionally, the company continuous to report better performance by remaining within its covenants with the gearing at 37.1%, secured debt to total asset of 12.9, interest coverage of 3.8 times. The debt composition of Westfield corporation stands 46% while the composition of Equity for the Westfield Corporation Stands 54%.
Westfield Corporation has successfully opened $1.2 billion Westfield Trade Centre in advance of the targeted yield. The successful opening of the Westfield Trade Centre is an important milestone for the company and it can be stated the company has already established the most flagship productive asset in the portfolio of the organization. An important assertion can be bought regarding the Vornado Realty Trust is that the company has lowest coverage of free cash flow. Whereas, Westfield Corp has reported a higher cash flow. Considering the Dividend Pay-out ratio of Westfield Corporation has reported a higher Dividend Pay-out ratio during the three year period. Whereas the Vornado Realty Trust reported a lower dividend pay-out ratio during the last three years. The primary reason for lower dividend pay out ratio is that the company has higher amount of debt than its equity. While Westfield Corporation will continue to generate strong earnings with stable flows and as a result of this investors would be more attracted to invest in Westfield corporation in contrast to the Vornado Realty Trust.
The management of the Westfield Corporation maintains the leadership position and this can be identified in the rising value of the shareholders over the period of time. The company aims to pay its shareholders KMP and their higher potential executives that are close to the top of the market in which they operate. Westfield corporation with the help of the management of the team performance against the performance hurdles that is set in regard to the awards made under the long term incentives programs is generally aimed at generating sustainable financial performance and long term value creation of the shareholders.
Vertical Analysis
From the participation of the executive team in the company equity related plans where the value that is derived by the executive would reflect the movements made in the price of the share over the time. By creating such kind of cultural rewards based on performance and decision making it can be stated that the investment decision of Westfield corporation is aimed at creating a long term creation of value for the security holders. Westfield investment in properties accounts for 16.8% billion that are carried at fair value and represents 89.7% of the total assets.
On the other hand, Vornado realty trust reported a reduction in the income of the common shareholders and also reported a fall in the net income that is attributable to the Class S unit holders during the period of twelve months for the period ended 2016. The fall in the value of the shareholders was primarily due to the increase in the issuance cost that ultimately lowered the net income attributable to the shareholders. Therefore, it has been initially recorded as the reduction in the value of the shareholder’s equity and partners’ capital. In order to gain higher shareholder rating, Vornado Realty Trust would be required to report a sustained performance by reducing the issuance cost which would result in increased shareholder’s earnings. Therefore, depending upon the information derived above an investor would prefer in investing in the shares of the Westfield Corporation since the company has reported a better proportion of total assets. This would lead to fetching a higher return on equity, which is being invested by the investors.
The short term incentive payments for the important managerial personnel and the senior executive team were at the target level. As reported by the company the co-chief executive officers and the chief operating officer received an approximately 90% of the targeted total short term incentives. The remuneration levels relating to the key management personnel and the senior executive remuneration level were set at the identical level in the year 2016 with certain exceptions concerning the promotions and the correction of any market anomalies that is recognized during the year. Short term incentives of the Westfield Corporation are closely associated with the performance of the executive that is evaluated against objective of the key performance indicator in regard to the performance review and the development system. The statutory remuneration paid to the co-chief executive officer Peter Lowy stands $7,986,205. The information provided are reviewed by the committee of human resource and the board.
On the other hand, Vornado Realty Trust only has reported an equity compensation plan as the company issues the securities based on the outstanding share warrants and rights. The equity compensation plan comprises of the aggregate value of 2,055,430 units of shares. However, on analysing both the organizations an investor would select Westfield corporation since the company has reported a higher amount of total debt with better ability to manage the budget and their fund. As a result of this the proportion of equity will assist the company in providing better returns to the shareholders through higher earnings per share.
On being the consultant of the Vornado Realty Trust an important consideration could be made towards the reduction in the cost of the issuance and shareholder value creation. Since the company reported a fall in the net income that was attributable to the shareholders. An important suggestion could be made in the areas of reduction in debt since the composition of debt reported by the company is higher than the amount of equity contributed by the company. Therefore, higher debt than equity capital would make Vornado Realty Trust vulnerable to liquidity. On the other hand, Westfield corporation appears to be on the right path of expansion and attaining new financial performance objectives. The proportion of capital accounts 54% of the total capital with higher amount of assets and lower liability would make the company a profitable venture.
Reference List:
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.
Annualreports.com. (2017). Vornado Realty Trust – AnnualReports.com. [online] Available at: https://www.annualreports.com/Company/vornado-realty-trust [Accessed 8 Nov. 2017].
Corp, W. (2017). Full Year Financial Reports | Westfield Corp. [online] Westfieldcorp.com. Available at: https://www.westfieldcorp.com/investors/shareholder-information/financial-reports [Accessed 8 Nov. 2017].
Hoskin, R.E., Fizzell, M.R. and Cherry, D.C., 2014. Financial Accounting: a user perspective. Wiley Global Education.
