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Financial analysis of Ramsay Health Care Ltd Assignment PDF

   

Added on  2021-05-31

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RUNNIG HEAD: Financial analysis of Ramsay Health Care Ltd1|P a g eName of the studentTopic- Financial analysis of Ramsay Health Care LtdUniversity Name-

Financial analysis of Ramsay Health Care Ltd2|P a g eCAPITAL STRUCTURE OF Ramsay Health Care Ltd Capital structure of Ramsay Health Care Ltd divulges the way company has backed its finance. i.e. debt and equity to raise the funds. The debt to equity ratio assists in determining whether Ramsay Health Care Ltd has optimum capital structure or not (Weygandt, Kimmel, and Kieso, 2015).The capital structure is determined as optimum capital structure when it maximises theshareholder’s wealth (Gitman, Juchau, and Flanagan, 2015). If in case, the profitability of theRamsay Health Care Ltd is low then it should keep the debt to equity ratio below 70:30 i.e.70% equity and 30% debt portion in capital structure (Ehrhardt, and Brigham, 2016).Whether Ramsay Health care has optimal capital structure or notThe debt to equity ratio has been computed to determine whether Ramsay Health Care Ltd has optimum capital structure or not.Debt to equity structure of AMSAY HEALTH CARE LTD (AUD in millions)Particular 2013-062014-062015-062016-062017-06Total stockholders' equity15441703186020232276Total liabilities25212807578462185977Debt To equity ratio of Ramsay Health1.6327721.6482683.1096773.0736532.626098(Ramsay Health Care Ltd, 2017).The debt to equity ratio of company shows that company has more than 50% its debt portionin its capital structure and consistently increasing its debt to equity to 70% i.e. 70% part of itscapital is debt and rest is for the equity (Zhu, 2014).Nonetheless, the profitability of the company has been increasing throughout the timewhich shows that company could pay off all of its interest payment and charge from itsearnings before interest and tax (Brigham, and Ehrhardt, 2013). It could be inferred thatRamsay has optimum capital structure as it has increased its financial leverage with theincrease in its profitability. If in case, company has downfall in its revenue then it couldreduce its debt portion in near future by redemption of its bonds.

Financial analysis of Ramsay Health Care Ltd3|P a g eReferencesBrigham, E.F. and Ehrhardt, M.C., 2013.Financial management: Theory & practice.Cengage Learning.Ehrhardt, M.C. and Brigham, E.F., 2016.Corporate finance: A focused approach. Cengagelearning.Gitman, L.J., Juchau, R. and Flanagan, J., 2015.Principles of managerial finance. PearsonHigher Education AU.Ramsay Health Care Ltd, 2015, annual report, accessed on 9th May, 2018 available at http://www.ramsayhealth.com/Investors/Annual-and-Financial-ReportsWeygandt, J.J., Kimmel, P.D. and Kieso, D.E., 2015.Financial & Managerial Accounting.John Wiley & Sons.Zhu, J., 2014.Quantitative models for performance evaluation and benchmarking: dataenvelopment analysis with spreadsheets(Vol. 213). Springer

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