Perspectives in Health and Social Care Management: Financial Analysis of Sonic Healthcare Limited

This report provides a financial analysis of Sonic Healthcare Limited in the healthcare industry. It includes an analysis of financial statements, key financial ratios, and industry group. The report concludes that the company's financial performance is positive and healthy, but it needs to improve its current ratio.

PERSPECTIVE IN HEALTH
AND SOCIAL CARE
MANAGEMENT

Table of Contents
ABSTRACT....................................................................................................................................3
MAIN BODY..................................................................................................................................3
Industry group..............................................................................................................................3
Sonic Healthcare Limited............................................................................................................3
Financial statements.....................................................................................................................4
Key financial ratios......................................................................................................................5
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................1
APPENDIX......................................................................................................................................2
Statement of Income....................................................................................................................2
Statement of financial position....................................................................................................3
Cash flow statement.....................................................................................................................5
Statement of change in equity......................................................................................................7

ABSTRACT
Financial report is of the major aspect that is related with the analysis of the financial
performance of the company. Through the study of this report the company can make an analysis
of its own financial performance along with determining the area of improvement. This report
discusses the financial performance of the company with the help of analysis of the financial
statements and its financial ratio with the selection of adequate industry and concerned company.
MAIN BODY
Industry group
There are various industry group that are registered over the Australian Stock Exchange.
These includes the Basic material, Consumer goods and media, Financial, Real estate,
Healthcare, Technology, Industrial goods and Telecom and utilities (Industries, 2021). While
considering about the basic material industry the concerned companies would include those who
deals with the basic materials and commodities, in the same case the companies that are
associated with the consumer goods and media is related with the consumer goods and media
that’s is associated with the consumer goods, financial industries is related with the financial
institutions and banks, real estate industry is highly concerned towards the property and
infrastructure. Technology industry is concerned with the technology related products, telecom
and utilities industry comprises of all those companies that are related with the media companies
and the communication.
Out of them the selected industry is healthcare which is one of major industry of the
Australia that is associated with those companies that are related with healthcare, medicines,
paramedical and various other aspects. This is one of the major industry that deals with the
medical and healthcare facilities. It includes various diagnostic centres, hospitals and various
other. Various medical originating companies, training institutes are also included in this.
Sonic Healthcare Limited
This is an Australian company that provide, pathology, laboratory services, and radiology
services. This is one of the largest Diagnostic company of Australia. Its headquarter is located in
Sydney, Australia. It was founded on 1934. The number of employees are 37000. After listing on

ASX in 1987 the growth of Sonic Hospital has risen from the small laboratory to the global
market leader along with the acquisition of quality business. After 2000 Sonic made a replication
of Medical leadership at the international level which will make the third largest diagnostic
company in the world with a global reputation of quality machine and care (Our history, 2021).
The business of the of the Sonic is highly concentrated towards the providing of medical,
radiology, pathology and other healthcare services. As per its corporate governance norms the
Sonic follow two aspects that include the performance and conformance. Its make performance
of its operations ethically, responsibly and highest standard of integrity. While making a
consideration towards the social contribution it makes prepare the doctors and the medical
professionals that will lead to play an important role in the generation of the employment. With
the aspect of paying tax on a regular basis it also fulfils its duty towards the contribution of the
government revenue.
Financial statements
The financial statement of the company are the major instrument that depict the financial
health and position of the company. With the help of financial statement and its analysis the
company’s financial growth would be able to get determined (Lessambo, 2018). It includes the
income statements, financial position statement and cash flow statements.
Income statement or profit and loss account is one of the major financial statement which
shows the company’s net profit or loss that is being earned by the company (Pepple and Ejiogu,
2021). While making an analysis of the income statement of the Sonic Healthcare limited it cane
be analysed that the company is making a profit on an inclining trend. This is because in 2020 it
was 541903 which increases in 2021 and become 1347658. This means that the company’s
profitability is high which clearly depict the positive and good financial health of the company.
in the same way the sales and income of the company is also increasing from 6831843 of 2020 to
8754123 in 2021.
Balance sheet is also a major financial statement that shows the company’s financial
position of assets, liabilities and equities (Felber, Campos and Sanchis, 2019). While making an
analysis of the financial position of the Sonic Limited through Balance sheet it can be analysed
that the company’s financial position is inclining with the accounting equation wherein the
company’s total assets will be equal to the sum of liabilities and equities. In the same way the it

is also seen that the company’s current assets are declining from 2455105 of 2020 to 2284573
which means that the company’s liquidity and cash position is declining. In the same way it is
also analysed that the proportion of equity in the Sonic is raising while making it compared with
the 2020.
case of cash flow statement which depict the net cash position in terms of cash inflows
and outflows also shows that the company’s cash position is declining because the net cash
position in 2020 was 488645 which decline in 2021 and become -298572. This shows that the
company’s outflow of cash is raising while making it compared with its inflows. This also shows
that the company’s net cash position is declining which shows that the company has not enough
cash that it can make repayment of its operational activities.
In the same with the analysis of change in equity statement it is observed that the opening
equity was 3,966,892 while the closing equity become 4,081,981. This shows that the change in
equity has occurred in the inclining direction with the aspect of issue of the equity shares and the
payment of dividend.
Key financial ratios
Financial ratio is one of the major aspect that would determine the financial health of the
company in terms of making an analysis of the financial results (Lee and Lee, 2018).
NAME OF RATIOS FORMULA 2021 2020
Return on capital
employed
Operating profit/
Capital employed*100
=
8,754,123/9543054*10
0
= 91.73
6,831,843/10056997*1
00
= 67.93
Net profit ratio Net profit/ sales
revenue *100
=
1,347,658/8,754,123*1
00
= 15.39
=
541,903/6,831,843*10
0
= 7.93
Current ratio Current assets/current
liabilities
= 2,284,573/2,217,937
= 1.03
=2,455,105/2,070,133
= 1.18

Debtors collection
period
Trade receivables/
credit sales*365
=
31,549/8,754,123*365
= 1.31
=
50,429/6,831,843*365
= 2.69
Debt to equity ratio Total liabilities/total
shareholder equity
= 5,256,648/6,504,343
= 0.80
= 6,462,732/5,664,398
= 1.14
Return on total asset Earning after tax/Total
assets*100
=
1,347,658/11,760,991*
100
= 11.45
=541,903/12,127,130*
100
= 4.46
Notes to calculations:
Capital employed= total assets- current liabilities
For 2021
Capital employed= 11,760,991- 2,217,937= 9543054
For 2020
Capital employed= 12,127,130- 2,070,133= 10056997
Return on capital employed:
This is one of the major financial ratio that measures the return earned by the company
with regard to making an employment of capital (Lisek, Luty and Zioło, 2020). While making an
analysis of the Sonic healthcare limited it is observed that the company’s ratio in 2020 was 67.93
which raise in 2021 and become 91.73 (Annual report, 2021). This shows that the company is
making a high return on the capital which also denoted that the company will make full
utilization of its capital with regard to the generation of the return. With this inclining ratio the
company it can be interpreted that the company is making a full utilization of its capital and with
the high return the company can make utilization of its earned return in reinvestment which will
further assist in generation of more high return.
Net profit ratio:
With aspect to this ratio the net profitability of the company would be analysed in the
context of the sales. This means that through this ratio the net profitability will be able to get

analysed (Sadi’ah, 2018). While making an analysis of the Sonic healthcare it is found that the
ratio in 2020 was 7.93 while in 2021 it become 15.39. This shows that the company is earning
high profit which is also reflected in its financial ratio. This also shows that the company is
making adequate sales which will let it to earn high profitability. High NP ratio also shows that
the company’s financial position is positive and healthy that let it to show high profitability. In
the same way the raising ratio also shows that the company is making a full control over its cost
and expenses along with enabling significantly quality services to its users.
Current ratio:
This is also called liquidity ratio. As per this ratio the capacity of the company in terms of
making payment of short-term liability would be analysed (Tissen and Sneidere, 2017). With
respect to the Sonic healthcare limited the company’s ratio is declining i.e., in 2020 it was 1.18
while in 2021 it become 1.03. This shows that the company is making a low performance with
respect to its liquidity because it has low proportion of liquidity. With the aspect of low liquidity
the company would not be able to make repayment of its current liabilities and daily operation. It
can because of the raised short-term debt or a decreased in current assets or both. This need to be
improved so that the daily expenses and operational activities would be able to get performed.
Debtor collection period:
It refers to the period and time which shows the efficiency of the company in terms of
collection of debt. This ratio denotes that in how much time the company will make the
collection of debts. While analysing this ratio of the Sonic healthcare it is observed that the ratio
is declining because in 2020 it was 2.69 while in 2021 it become 1.31 (Annual report, 2021).
This declining ratio denotes that the company is making a good financial performance in terms
of making a collection of debts from the market. With the aspect of making fast recovery of
debtor the company can make arrangement of funds for its operation and other investment
activities that will lead it grow further. With respect to making a collection of debt from the
market the company can make the grab the funds on the right time that will support its financial
structure.
Debt to equity ratio:
This is an important financial ratio which measures the proportion of debt and equity in
the financial structure. it is highly important that there must be an adequate balance between the
debt and equity so that the company can make smooth operation (Nuryani and Sunarsi, 2020).

While analysing the Sonic healthcare limited it is found that the ratio in 2020 was 1.14 which
decline in 2021 and become 0.80. this declining percentage shows that the company’s financial
structure is well balanced. This also shows that the company has adequate proportion of dents
and equity in its financial structure. An adequate balance between the debt and equity would
further maintain the profitability of the company in terms of making an interest payment and
dividend distribution.
Return on total asset:
This is one of the important financial ratio which measures the efficiency of the company in
terms of generation of return and income from the employment and utilization of its assets
(Setyaningsih and Yuliana, 2020). This ratio shows that hoe efficiently the company make use of
its assets in the generation of the return. With respect to the Sonic healthcare the ratio is
increasing i.e. in 2020 it was 4.46 while in 2021 it become 11.45. This shows that the capacity of
the company in terms of generation of return in the context of the utilization of its assets is high.
As Sonic is a healthcare company which by utilizing the machines and other equipment would
make full generation of income in the perspective of the its doctors.
CONCLUSION
From the above report and financial analysis, it can be concluded that the financial
performance of the company is good and is showing an inclining trend. The rise in the
performance of the company denotes that it is earning adequate return and profitability with
other positive financial outcomes. The above analysis also shows that the company and its
operational efficiency is positive and showing a positive and healthy performance. However, at
the same phase it is also concluded that the company need to make cautious towards the current
ratio which need to be improved in terms of raising of current assets.

REFERENCES
Books and journals
Felber, C., Campos, V. and Sanchis, J.R., 2019. The common good balance sheet, an adequate
tool to capture non-financials?. Sustainability. 11(14). p.3791.
Lee, B.H. and Lee, S.H., 2018. A study on financial ratio and prediction of financial distress in
financial markets. The Journal of Distribution Science. 16(11). pp.21-27.
Lessambo, F.I., 2018. Financial Statements. Analysis and Reporting.
Lisek, S., Luty, L. and Zioło, M., 2020. The measurement of return on capital employed in
assessment of company’s condition. Zeszyty Naukowe Małopolskiej Wyższej Szkoły
Ekonomicznej w Tarnowie. 46(2). pp.55-67.
Nuryani, Y. and Sunarsi, D., 2020. The Effect of Current Ratio and Debt to Equity Ratio on
Deviding Growth. JASa (Jurnal Akuntansi, Audit dan Sistem Informasi
Akuntansi). 4(2). pp.304-312.
Pepple, D. and Ejiogu, C., 2021. Income Statement and Balance Sheet. In Financial and
Managerial Aspects in Human Resource Management: A Practical Guide. Emerald
Publishing Limited.
Sadi’ah, K., 2018. The Effect of Corporate Financial Ratio upon the Company Value. The
Accounting Journal of Binaniaga. 3(02). pp.75-88.
Setyaningsih, I.P. and Yuliana, I., 2020. Total assets turnover against dividend payout ratio: The
role of return on assets mediation. Indonesian Journal of Management. 20(3). pp.206-
214.
Tissen, M. and Sneidere, R., 2017. THE MODIFICATION OF LIQUIDITY RATIO FOR THE
COMPANY'S SOLVENCY ASSESSMENT. New Challenges of Economic and
Business Development–2017 Digital Economy, p.660.
Online references
Annual report 2021. SONIC HEALTHCARE LIMITED. [Online]. Available through
<https://investors.sonichealthcare.com/FormBuilder/_Resource/_module/
T8Ln_c4ibUqyFnnNe9zNRA/docs/Reports/AR/SHL_AnnualReport_2021.pdf>
Industries., 2021. [Online]. Available through https://au.finance.yahoo.com/industries/healthcare/
Our history., 2021. SONIC HEALTHCARE LIMITED. [Online]. Available through
<https://www.sonichealthcare.com/about/ >
1

APPENDIX
Statement of Income
2

Statement of financial position
3

4

Cash flow statement
5

6

Statement of change in equity
7

8