Comprehensive Financial Analysis of Ramsay Health Care Ltd

This report provides a detailed financial analysis of Ramsay Health Care Ltd, a global healthcare company. The analysis covers various aspects of the company's financial performance, including a review of financial reports, director's reports, and auditor's reports. It examines the company's revenue trends, cash flow activities, retained profits, and loan structures. Key financial ratios such as liquidity ratios, asset turnover ratio, and return on equity are calculated and interpreted to assess the company's financial health and sustainability. The report concludes that Ramsay Health Care demonstrates healthy operations and a sustainable financial position, with no significant discrepancies reported by the auditors. This document is available on Desklib, a platform offering a wide range of study resources for students.

Running head: FINANCIAL ANALYSIS OF RAMSAY HEALTH CARE
Financial Analysis of Ramsay Health Care
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1FINANCIAL ANALYSIS OF RAMSAY HEALTH CARE
Executive Summary
The aim for the project is analysis of the health care company Ramsay Health Care Ltd. The
operations of the company is diverse in the healthcare fields which caters its services to the
public by its health related products and several others wellbeing services and products. A
detailed analysis of the company’s financial statement was done in order to extract the financial
position of the company. There were several key reports studied in the assignment from the
auditor opinion report to the director review reports were some of the key factors studied in the
assignment. The brief about company primary operation that is volatility and trend in revenue of
the company was given emphasis. The financial data were restructured with ratio analysis
showing the financial position of the company.

2FINANCIAL ANALYSIS OF RAMSAY HEALTH CARE
Table of Contents
Introduction......................................................................................................................................3
Discussions......................................................................................................................................4
Financial Reports.........................................................................................................................4
Directors Reports.........................................................................................................................4
Auditors Report...........................................................................................................................5
Revenue Analysis........................................................................................................................6
Cash Flow Activities....................................................................................................................7
Retained Profit/Loans and Debentures........................................................................................7
Ratio Analysis..............................................................................................................................8
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................11

3FINANCIAL ANALYSIS OF RAMSAY HEALTH CARE
Introduction
The Ramsay Health Care Limited company caters its products and services in the health
and wellbeing sector. The company is the global operating unit of different hospital chains and
group the company has under the segment. The company operates around 235 hospital services
in different parts of the country and geographical boundaries. The company operates and has a
several exposures in different field of healthcare services like it provides treatment center and
facilities, the rehabilitation centers and others psychiatric units and other practicing units like the
nursing colleges for young professional across six different countries. The company has its wide
operation and group of hospital in the popular countries like United Kingdom. France, Italy,
Malaysia, Indonesia and Australia are the countries under which the company has its group of
hospitals operating (Duckett and Willcox 2015).
The strong and active employee base for the company has provide the company with an
edge solution to perform better in the operations of the company. The Financial report for the
year 2017 was selected for the company for the assessment of financial analysis and determine
the financial position of the company. The directors report explained under the assignment has
given us an brief idea about the company overview in terms of strategy the company is deploying
the various compliance procedures and the alignment of growth and sustainable growth from the
view context of the management of the company (Griffin and Wright 2015).
The Auditors Report had some crucial information about the company recording and
classification of accounting transaction that occurs on the daily transactions of the company.
Ratio Analysis was the key analytical tool used to perform the financial analysis for the same
(Bongini, Nieri and Pelagatti 2015).

4FINANCIAL ANALYSIS OF RAMSAY HEALTH CARE
Discussions
Financial Reports
The key dominating aspect of the annual report is the financial report of a company. The
financial report has given the overview of the company’s operation from the standpoint of
performance of the company. The breakdown of financial report of the company shows the
performance of the company via the different components of the company’s financial data. The
Cash flow statement, income statements and the balance sheet of the company gives a detailed
analysis on company operating investing and financing activities of the company. It is crucial to
note that the Ramsay Health Care has shown considerable improvement when the same is
mapped by the financial performance of the company (Libby 2017).
Directors Reports
The director’s report for Ramsay Health Care Limited gives a detailed analysis for the
company corporate governance and financials and the accounting standard for the company. The
list of directors and there shareholding with the company is given in the report. The disclosure of
the company in terms of the director’s contracts or agreement with the company is disclosed. The
directors of the company has discussed the operating and financial review for the company in the
financial and reporting year 2017. The principal operations and the primary activities of the
company performance and the strategy and the management ideas applied for the same is
discussed (Grant 2016). The inorganic growth strategy for the company was discussed under the
head the mergers and acquisitions of the company and there reason for the potential growth was
explained under the director’s report (O’Donnell, et al. 2015). The financial review for the

5FINANCIAL ANALYSIS OF RAMSAY HEALTH CARE
company was done in context and view of the performance of the company. The revenue for the
company has shown a significant and considerable improvement in the field of revenue from
services. The key financial indicators like the EBIT and the Operating margin for the Ramsay
Health Care has shown a considerable improvement. The company performance according to the
geographical location that is the sector or the different group analysis was performed. The net
profit margin for the company showed an increase of about 8.60% from the year 2016-17. The
total assets of the company has shown an increase of about 1.1% from the financial year 2016-17
the fall in the total liabilities of the companies by about 3.5% from the year 2016-17. The fall in
total liabilities of the company was accompanied by the reductions in the total borrowing of the
company. The repayment to bank loans and the bondholders of the company was done when the
profit of the company has shown sustainable improvements in the form of increasing net profit.
Since interest expense was one of the major component in the income statement of the company
has reduced the same by repaying and reducing the debt of the company. The remuneration
report for the company gave a breakdown and the divisions of remuneration paid to the directors
of the companies in the form of salaries and benefit paid (Izquierdo, UVA and ULE 2015).
Auditors Report
The Auditor for the Ramsay Health Care Company is Ernst and Young for the financial
year 2017. The Auditor report of Ramsay Health Care has shown that the financial statements of
the company for the year2017 financial year gives a true and fair view about the company’s
financial data presented. The financial data presented by the company represents a true and a
fair view of the company’s financial positions. The standards that is the accounting standards for
the Ramsay Health Care Ltd is governed by the Australian Accounting Standard Bodies. The
financial data of the company meets the guiding principal rules and regulations laid by the

6FINANCIAL ANALYSIS OF RAMSAY HEALTH CARE
accounting standard bodies. The key audit matters involved and studied by the auditors of the
company is the concern about the financials components like the Impairment of Goodwill,
Provisions for Insurance and the recognition of the revenue doe by the company (Bianchi 2017).
The director’s duty and there responsibility were some of the key aspects discussed in the report
(DeZoort and Harrison 2018).
Revenue Analysis
The revenue recognition policy by the company is such that the company recognizes
revenue on the base of fair value of the amount of considerations received by the company. The
reliability of the economic benefits flowing to the company is the key aspects the company looks
before recognizing any amount as a sources of revenue. The primary activity of the company that
is the revenue from patients in the form of services had been static and showed a slight growth of
about 0.24%. The primary reason for the change in other income was that the other income was
generated from non-core business activity of the company (Fang and Li 2015).
Change in Sales/Revenue
Particulars 2017 2016
(%)
Change
Revenue from Services
8,705,368.0
0
8,684,116.0
0 0.24%
Interest Income 1,787.00 7,081.00 -74.76%
Other Income- Dispose of Assets 120.00 2,153.00 -94.43%
Other Income- Sale of Assets 0.00 4,201.00 -100.00%
Total Revenue and Other Income 8,707,275 8,697,551 0.11%
Table 1: Revenue Decomposition
(Source: Ramsayhealth.com 2018)

7FINANCIAL ANALYSIS OF RAMSAY HEALTH CARE
Cash Flow Activities
The cash flow of the activities of the company saw changes due to decreasing profit margin in
the operating part of the company. The repayment of debt and borrowings of the company
mainly observed the decrease in the finance cost (Girish and Desai 2017).
Cash Flow Statement For The Year 2017
Particulars 2017 2016
(%)
Change
Cash Flow from Operating Activities
Receipts from customers 8,643,216 8,575,325 0.79%
Payments to Suppliers and Employees 7,432,025 7,341,415 1.23%
Cash Generated From Operations 1,211,191 1,233,910 -1.84%
Income Tax Paid
212,341.0
0
197,871.0
0 7.31%
Finance Costs
116,663.0
0
131,070.0
0 -10.99%
Net Cash flow from Operating
Activities 882,187 904,969 -2.52%
Table 2: Cash Flow Statement
(Source: Ramsayhealth.com 2018)
Retained Profit/Loans and Debentures
The retained profit for Ramsay Health Care Ltd is around 48% the company retains
around as a possible source of deployment of internal sources of funds. The company had around
261.4 cents as its Core Earnings per share in the financial year 2017 while the amount was
around 231.4 cents, which shows a growth in the earning per share of about 13% from the year
2016-17 (Smith et al. 2018).

8FINANCIAL ANALYSIS OF RAMSAY HEALTH CARE
The current loans and the borrowing of the company has shown a significant decrease of
about 27% decrease the step was taken by the company to reduce the loans and borrowings of
the company which were giving an impact on the company’s net profitability. Whereas the non-
current loans and borrowings of the company has shown a decrease by about 2% (Andrés, Arce
and Thomas 2017).
Particulars 2017 2016
(%)
Change
Net profit 550,996.00 511,262.00 7.77%
Earnings Per Share 0.261 0.231 12.99%
Dividend Per Share 0.135 0.119 13.45%
Retained Earnings 48.28% 48.48% -0.43%
Weighted Number of Average
Shares 202,686,639 202,415,611 0.13%
Current Liabilities 2017 2016 %Change
Interest Bearing Loans and Debentures 85543 117927 -27.46%
Non-Current Liabilities
Interest Bearing Loans and Debentures 3261816 3326821 -1.95%
Table 3: Retained Earnings and Loans and Debentures of Ramsay Health Care Ltd
(Source: Ramsayhealth.com 2018)
Ratio Analysis
The Financials of Ramsay Health Care was taken into account to perform the ratio
analysis for the company. The ratios performed while using the financial data of the company is
the liquidity ratio of the company, which includes the quick and current ratio, and the cash flow
ratio. The Assets turnover ratio and the return on equity ratio, which are key and important

9FINANCIAL ANALYSIS OF RAMSAY HEALTH CARE
aspects of determining the financials of the company was taken into account while performing
the ratio analysis for Ramsay Health Care Ltd (Grant 2016).
Ratio Analysis 2017
Current Ratio 1.07
Quick Ratio 0.87
Cash Flow Ratio 0.48
Asset Turnover Ratio 1.05
Percentage Return on Equity 23.36%
Workings
Current Ratio = Current Assets/Current Liabilities 2017
Current Assets 1960325
Current Liabilities 1833988
1.07
Quick Ratio: (Marketable securities+ Cash+ Trade
Receivable)/Current Liabilities.
Marketable securities+ Cash+ Trade Receivable 1591707
Current Liabilities 1833988
0.87
Cash Flow Ratio: Cash Flow from Operations/Current
Liabilities.
Cash Flow from Operations 882,187
Current Liabilities 1833988
0.48
Asset Turnover Ratio: Sales/ Average Total
Assets*100
Sales or Revenue 8707368
Average Total Assets 8,288,422
1.05
Percentage Return on Equity: (Net Income/
Shareholder's Equity)*100
Net Income 550996
Shareholder's Equity 2358686
23.36%
Table 4: Ratio Analysis of Ramsay Health Care Ltd
(Source: Ramsayhealth.com 2018)

10FINANCIAL ANALYSIS OF RAMSAY HEALTH CARE
Conclusion
The Ramsay Health care company operations and the return it deploys to the stakeholders
of the company is healthy. The sustainability factor was seen in the company’s financial
operation. There was no discrepancies reported in the Auditors Report for the company. The key
accounting changes were noted and discussed under the project and the classification of the
expenses were given a justifiable base for the same. The financial overview of the company
states the growing profitability via the primary operations of the company that is through revenue
from patients services shows the strong financial position of the company.

11FINANCIAL ANALYSIS OF RAMSAY HEALTH CARE
Reference
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and auditing. Accounting Horizons, 29(2), pp.377-379.