Valuation of Ramsay Healthcare Limited

This report provides a valuation of Ramsay Healthcare Limited using DCF and multiple valuations. The fair value of the firm is found to be $2,222.34 million and the price to earnings ratio is $58.119 million. The report also includes an overview of the organization, analysis of the industry, and business scenarios.

Running Head: VALUATION OF RAMSAY HEALTHCARE LIMITED
VALUATION OF RAMSAY HEALTHCARE LIMITED
Name of the Student
Name of the University
Author Note

1VALUATION OF RAMSAY HEALTHCARE LIMITED
Executive Summary
The main objective of the report is to do the valuation of the Ramsay Healthcare limited company and
financial assumption of the analysis of the company. The study has proceeded with finding the fair
valuation of the company with the help of DCF and multiple valuation of the company. It is found that
the expected present value of the future cash flow is $2,222.34 million and the price to earnings ratio
is found to be $58.119. The company is found to be having a good revenue in the financial year 2018
with good financial strength.

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Table of Contents
Introduction...............................................................................................................................3
Discussions..............................................................................................................................3
Overview of Organization...................................................................................................3
Five Years Planning Of the Organization........................................................................3
Analysis of Industry.............................................................................................................3
Model of P/L and Balance Sheet Statement...................................................................4
Business Scenarios.............................................................................................................6
Valuation...............................................................................................................................7
Stock Valuation to buy, hold or sell the shares...............................................................8
Management Summary......................................................................................................8
Recommendation....................................................................................................................8
Conclusion................................................................................................................................8
References...............................................................................................................................9
Appendix.................................................................................................................................10

3VALUATION OF RAMSAY HEALTHCARE LIMITED
Introduction
The valuation of a company is very important to estimate the value of the price of the
investments that the depositors are agreeable to pay for the business. The report is on valuating the
fiscal planning of Ramsay Health Care Limited. The paper is discussed in the overview of the
organisation, and its analysis is done. It is further discussed on the valuation of the share on the basis
of DCF and Multiple valuations. The intense of the paper is to do a company valuation of Ramsay
Health Care Limited.
Discussions
Overview of the Organization
Ramsay Health Care Limited is a health care industry established in Australia, Sydney. The
organisation is providing the health care services related to the surgery, therapy and psychiatric care.
It was founded in the year 1964 (Lin, 2018).
Five Years Planning Of the Organization
 Increase the funding for the health services to develop the growth at the rate of $4.5 billion in
the next five years.
 Focus on the renewal of short timing, waiting for the patients.
 Improve the standard of diagnosing cancer in the organisation.
Analysis of the Industry
 Environmental analysis- Ramsay Health Care limited may have an impact according to the
changes in environmental factors. The climatic change can impact the industry in managing
the transportation of the resources (Bishop et al. 2016). The increase in financial strain may
cause financial pressure to the company. The company face a lack of support from the
government to use renewable energy for the products of the industry that may be produced
by Ramsay Health Care Limited.
 Industry Analysis- Ramsay Health Care limited is on the 47th position in the health care
sectors in the world. The company has now invested the money in the online platform. It has
the opportunity to bring a stable market due to the lower inflation rate in the country. The
company had financial pressure due to the increased price of china. One of the major threat
of the company is of the rising rate of raw material (Collyer, Harley and Short 2015). But, the

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company has the opportunity to build new and innovative diversity of products due to a
change in consumer behaviour.
Model of P/L and Balance Sheet Statement
Income statement
(For the year finished 30th June 2018)
(Ramsayhealth.com, 2019)
Gross profit (2018) = Total revenues- cost of goods sold
= 9,181,371- 8,472,754
=$708,617
Balance sheet Statement
(For the year ended 30th June 2018)

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(Ramsayhealth.com, 2019)
Total Assets (2018) =Total Liabilities + Total equity
=$9,312,869
Business Scenarios
 Worst Case-It was quite challenging in the UK, impacted the overall earnings in the share
 Base Case-Successfully undergoes acquisition in November 2018 with Capio and the
commencement of integration process (Conte et al. 2018). Continued the efficiency in cost
management.
 Best Case- In March 2019, it was declared as the largest service provider of health in the
United Kingdom.

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Valuation
The fair worth of the firm is reflected by estimating the upcoming cash flow of the company
and determining the present worth of the stock, done in terms of DCF. The market worth of the
company is calculated by multiple valuations through price to earnings ratio of Ramsay Health care
limited.
Discounted Cash Flow Worth of the firm
Assuming the five-year cash flows of the firm
The discounted rate = 7.5%
t is the time period= 5 years
DCF=$ 2,222.34 million.
The current value of the cash flow is found to be $2222.34 million, which is higher than the current
investment.
The fair value is found to be $2,222.34 million
Multiple valuations of the company
The stock market multiple valuations of Ramsay Health Care Limited has done by the formula Price
/earnings ratio.
The market price of the share as per 11th March 2019=$63.350
Earnings per share=$1.09
Price to earnings ratio= Market price of the share/earnings per share
=63.350/1.09
=$58.119 million
The fair value of the stock=P/E Ratio * EPS
= 68.119*1.09 = $74.25 million.

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Stock Valuation to buy, hold or sell the shares
From the valuation, it is found that the DCF of the future cash flow of the investment is greater
than the current cash flows, the investors should consider the opportunity to buy the shares, receive a
profit in expected cash flows.
For the multiple valuations, the P/E ratio is determined. The market worth of the company is
calculated with the earnings. If the price to earnings ratio is higher than the investor wants to hold and
buy the shares, and if it is lower than the previous years, than the investor may sell the investments.
Management Summary
The Ramsay’s has sustained the growth rates in the relevant years. The profitability of the
firm is increased $579.3 million. The net profit after tax is found to be $388.3 million. The company is*
determined as one of the top company to raise its dividend of the year. The company is focusing on
the organisational growth, developments and growth through acquisition with the private and public
companies (Dumay and Hossain 2019). The market is leading in terms of health, emergencies,
surgeries, and maternity care. The company focuses on the quality of the services for improving the
care for the patients. The company is currently using the data and securing information to increase
the clinical standards related to care of patients and sustaining in leading the outcomes. The company
has a challenging impact on the growth and long term focus on the health industry (Soundy 2016).
The company is focusing on innovations, digital initiatives and an increase in quality of the services.
Recommendation
 The company share price is fluctuating in the market. Ramsay Healthcare needs to focus on
the insiders that may disturb the chance of the firm to run.
 The firm needs to focus on building loyalty with the shareholders.
Conclusion
It is found that the annual statements of the balance sheets show that the fiscal position of the firm is
stable in the year 2019. The profitability of the company is increased by $579.3. Ramsay Health care
share price is fluctuating at a diverse rate. The fair worth of the firm is $41.74. The business is a

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leading health care servicer in terms of surgeries and other health care. The estimated present worth
of the upcoming cash flow is found to be $2,222.34. The company is found to be at profitability.

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References
Bishop, T.F., Ramsay, P.P., Casalino, L.P., Bao, Y., Pincus, H.A. and Shortell, S.M., 2016. Care
management processes used less often for depression than for other chronic conditions in US
primary care practices. Health Affairs, 35(3), pp.394-400.
Collyer, F., Harley, K. and Short, S., 2015. Money and markets in Australia's healthcare system.
Sydney University Press.
Conte, F., Vitale, P., Vollero, A. and Siano, A., 2018. Designing a Data Visualization Dashboard
for Managing the Sustainability Communication of Healthcare Organisations on Facebook.
Sustainability, 10(12), p.4447.
Dumay, J. and Hossain, M.A., 2019. Sustainability risk disclosure practices of listed companies in
Australia. Australian Accounting Review, 29(2), pp.343-359.
Lin, Y., Wang, L., Xiao, Y., Urman, R.D., Dutton, R. and Ramsay, M., 2018, June. Objective pain
measurement based on physiological signals. In Proceedings of the International Symposium on
Human Factors and Ergonomics in Health Care (Vol. 7, No. 1, pp. 240-247). Sage India: New
Delhi, India: SAGE Publications.
Soundy, A., Roskell, C., Adams, R., Elder, T. and Dawes, H., 2016. Understanding health care
professional-patient interactions in multiple sclerosis: a systematic review and thematic
synthesis. Open, Ther Rehabil 4, pp.187-217.

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Appendix
DCF model of Ramsay Health Care Limited
Price/ Earnings Ratio of the Company