Report on Jabal Omar Company

Introduction of Jabal Omar Company

The financial analysis represents the financial health and profitability of the companies. Financial analysis includes ratio analysis, vertical and horizontal analysis of statements. The present work is about the financial analysis of Jabal Omar Company using its financial statement of 2018 & 2019.

Company Overview, Capital and History  of Jabal Omar Company

The Jabal Omar Company is working in Saudi Arabia as a Joint Stock Company. The key activities of the company are to construct and develop the area of Jabal Omar in Saudi Arabia. Jabal Omar Company offer services to Saudi citizens for the lease selling of real estate in this selected locality as well as construct new buildings, hotels, houses, and roads for the development of Jabal Omar (which is adjacent to Western-Haram Square). Additionally, the company also work as an international trader and trade facilitators for importing and exporting of equipment in the country. According to the company’s history, Jabal Omar Company listed as an equity selling company in the Saudi stock market in December 2007. Currently, more than 710 employees are working in this organization under the leadership of Mr Khaled Mohammed Al Amoudi (CEO) to ensure delivery of services in the desired manner. Following the company's financial reports, the current capital of the Jabal Omar Company is around (SAR) 9294000,000. While the amount of total shareholders equity is limited to SAR 9223,169.

Horizontal and Vertical Analysis of Income Statement

According to the horizontal analysis, sales and cost of sales values are reduced over time. However, another revenue amount is increased with a positive growth rate of 93%. Company has also increased its marketing and administrative expenditure by the percentage of 25 that has reduced overall net profit margin. A negative value of 302% for net income shows a clear decrease in the net income of the company from 2018 to 2019. The vertical analysis represents that total expenditure is more than the total sales amount by 118%. Somehow, asset depreciation has a minimum negative impact of 3% on sales revenue (see the below appendix).

Horizontal and Vertical Analysis of Balance Sheet

Horizontal analysis of balance sheet or financial position represents that fixed assets (plant, equipment, building) have increased by 14.58% from 2018 to 2019. However, inventory and current assets are reduced by 18.81% and 9.17% respectively. Additionally, shareholder’s equity is reduced by 5.72%. While on the other hand, vertical analysis of the balance sheet shows that fixed assets are covering the largest percentage of total assets (60%). While on the other hand, inventory is almost 0% of total assets recorded in 2019 and 2018.

Ratio Analysis and Indicators of Jabal Omar Company

According to the ratio analysis of Jabal Omar Company, liquidity condition is poor as values of the current ratio and quick ratio are 0.50. minimum efficient liquidity ratio is 1. Thus, analysis indicates that the company will not be capable to meet its short term obligations by the use of current assets only. While profitability ratios such as profit margin and return on equity are negative (-0.44 and -0.04 respectively). Such a situation indicates the poor capability of the company's leaders to produce profit after business operations. Negative values indicate a financial loss. While solvency ratios include debt to total asset, debt-to-equity ratio, and financial leverage with 0.68, 2.16, and 3.13 respectively (Tadawul.com.sa, 2020).

Conclusion of Jabal Omar Company

The whole discussion concludes that Jabal Omar Company need changes in its operational strategies and policies for improvement in financial health condition. Horizontal analysis of Jabal Omar Company represents the growth ratio of the company's income during one year is not as good as it should be. While vertical analysis of the income statement represents the percentage of each account (expense and CGS) concerning the total sales during one fiscal year recorded as sales in the income statement.