Summary
This summary is a brief explanation to troubled Home Builders.
Analysis
After review of Toll Brothers (TOL) financial statements, they are in better shape than most big Builders trying to manage in this economic down turn. Toll Brothers have losses in the millions while others are in the billions. Let's look at the positive side, their financials are showing improvement by narrowing the losses incurred since 2006 and the company is reasonably positioned to take on opportunities in the market once it hits bottom. More importantly, their cash flow statement is positive in the midst of trouble. Unfortunately, writing down their inventories had a direct impact on their ratings. Whenever a company has overvalued assets due to market downturns, the real values must be restated and that is a problem. Most builders will experience this down rating as the market continues to correct itself throughout 2009 and 2010. Until the market comes to a true bottom, adjustments to financial statements for most home builders will continue.
