Swinburne University FIN60004: Valuation of Ramsay Healthcare

This report provides a comprehensive valuation of Ramsay Healthcare Limited, a healthcare industry leader. The analysis begins with an overview of the company, its five-year plan, and an industry analysis, including environmental and competitive factors. Financial statements, including an income statement and balance sheet, are presented to analyze the company's financial performance. The report then delves into business scenarios, including best and worst-case scenarios, to assess potential outcomes. The core of the report focuses on valuation, using both Discounted Cash Flow (DCF) and multiple valuation methods, particularly the price-to-earnings ratio, to determine the fair value of the company's stock. The DCF analysis estimates the present value of future cash flows, while the multiple valuation uses the P/E ratio to assess market value. The report concludes with stock valuation recommendations (buy, hold, or sell), a management summary, and recommendations for the company. The report finds the company in a good financial position with a stable fiscal position and a fluctuating share price.

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.

2VALUATION OF RAMSAY HEALTHCARE LIMITED
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

4VALUATION OF RAMSAY HEALTHCARE LIMITED
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)

5VALUATION OF RAMSAY HEALTHCARE LIMITED

6VALUATION OF RAMSAY HEALTHCARE LIMITED
(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.

7VALUATION OF RAMSAY HEALTHCARE LIMITED
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.

8VALUATION OF RAMSAY HEALTHCARE LIMITED
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

9VALUATION OF RAMSAY HEALTHCARE LIMITED
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.

10VALUATION OF RAMSAY HEALTHCARE LIMITED
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.

11VALUATION OF RAMSAY HEALTHCARE LIMITED
Appendix
DCF model of Ramsay Health Care Limited
Price/ Earnings Ratio of the Company