ACCY801 Accounting Analysis Report Sample

ACCY801 Accounting Analysis Report

1) Apply accounting and financial management principles in the planning and control of resources.

2) Analyse the accounting and financial environment of various organizations in order to assist with key financial decision making ethically.

3) Evaluate the implications of both short- and long-term investment decisions incorporating ethical judgement.

4) Interpret both internal and external financial reports for financial decision making.

5) Examine and summarize the key issues relating to accounting and financial management and recommend appropriate solutions to a variety of audiences.

Download a copy of the 2022 Annual Report of Ramsay Health Care from the Moodle site. Using the information in the Annual Report and other relevant information on the company that you can find from other sources, prepare a report that addresses the following:

1. Provide a brief assessment of the industry sector, players in the sector, competition, present performance, and future opportunities and threats to the sector .

2. Provide a brief summary of the company. Include details such as primary activities, recent performance, future plans, strengths and weaknesses of the company compared to the industry players and future prospects of the industry.

3. List and comment on important investment and financing decisions made by the company during the year.

4. Referring to the key corporate governance recommendations of the Australian Stock Exchange (ASX) Corporate Governance Council (CGC) and company policies in place to support its corporate conduct, briefly explain how the company ensures that it has maintained the highest standards of corporate governance.

5. List some key measures taken by the company to ensure that its business operations have incorporated a high level of ethics and ethical judgments

6. Briefly explain how the company ensure their corporate social sustainability during the year 2022

7. Identify the top five investors of the company and comment on the significance of their ownership stake in the company.

8. Analyse the financial statements of the company for 2022 using ratios and comment on the following aspects of the company in reference to comparative data you can find (either industry or last year values). Please show formulas and calculations in the appendix and only use the ratios for comments in the body of the report.

I. Liquidity,

II. Non-current Asset management efficiency

III. Capital structure

IV. Profitability

V. Market value

VI. Overall performance, financial status, and cash flow

VII. Suggestions to improve based on the ratio analysis

9. Analyse Operating Cash cycle of the company and comment on company’s performance in relation to its working capital management.

Solution

Introduction

The term financial management is the planning, organizing, controlling, and directing of financial undertakings in a business. Financial management is the practice that is helpful to make a business plan and analyze all the departments to stay on track. For this assessment, the chosen organization is Ramsay healthcare limited. The main purpose and scope of this report have critically analyzed through investments and financing decisions made by Ramsay healthcare limited. Furthermore, it also evaluated how the organization ensures and maintains its highest standard through corporate governance. It also involves ethical judgments and corporate social responsibilities. Moreover, Ramsay health care limited maintains its financial performance by using ratio analysis and providing recommendations on how to improve its financial performance by using many ratios with interpretation and working capital management.

Introduction to health care industry

The healthcare sector for MBA assignment expert is the aggregations and integrations of many industries within the financial systems which provide products or services to treat patients, preventive and rehabilitative. It includes all the commercialization lending to maintain or re-established their health. The healthcare industry plays a vital role in Australia because it operates under a share public-private model of Medicare systems in a national single funding model and state government. Primary health services in Australia rebates for some people and encouraged the tax charges to purchase their health insurance to cover their services in the private sector. In the year 1999, it indicates how government introduce private health insurance within the government system and contributed to 30% of private health insurance. The Australian healthcare sector is one of the best industries in the whole world which provides quality, safe, and affordable healthcare for families as well as other people. Individuals enjoy their services and the longest life expectancy on the whole planet. There are many providers of healthcare industries in Australia including medical specialists, nurses, primary care services, allied health services, and many more.

Medicare services have been Australian universal health in the year 1984 consist of major three parts such as public hospitals, medicine, and medical services. Medical care is accessible to Australian and New Zealand citizens and permanent residents in Australia with a reciprocal contract. Over the last seven days, the healthcare industries performed flat and declined by 4.0%. Moreover, this industry has been flat over the past few years and earnings are growing by 20% annually. There are many competitors including planet pharma, greenlight, medico link, Vista staffing solutions, and many more.

In the case of future opportunities, Australian healthcare industries are projected to reach 372 billion by 2022 and the Australian government is investing in strong health systems as a part of the stronger upcoming period through a record 132 million in the year 2022 and 2023. It also increased by $ 140 billion in the year 2025 with a total commitment of 537 billion over the next 4 years. The expansion rate of healthcare industries in Australia reaches US$1135 million in the year 2023 with 8.48% in projected market volume.

Introduction to Ramsay health care

Ramsay healthcare limited is an Australian international healthcare provider's services and hospital network which was founded in the year 1964 by Paul Ramsay. This company operates in many nations such as Europe, the United Kingdom, Asia, and Australia as well as specializes in surgery or psychiatric care. It is one of the biggest private hospitals in Australia with more than 100 facilities in operation. This healthcare limited owns and operates through healthcare facilities and creates a wide range of services from the day-to-day surgery procedures to complex surgery. This organization also provides psychiatric care and rehabilitation services such as anesthesia, cancer care, cardiac, and cardiac rehabilitation, cardio, dermatology, fertility services, gynecology, hematology, neurology in nuclear medicines, orthopedics, psychiatric, and many more. There are many surgery facilities in around 460 locations across 10 nations in Australia.

In the case of recent performance, this healthcare company performs well within these industries and properly maintains its income or profits. Moreover, due to the pandemic situation, this industry gives a direct impact on people's income for the first half in the year 2021, was decreased by 4.6% in a contrast to the past years.
In terms of future opportunities, this healthcare industry extends its business operations internationally and mainly focuses on the Asian marketplace. The main purpose of this healthcare industry is to invest in many technologies and innovative services to develop patient results.

The main strength of Ramsay healthcare limited is that this company has a strong flow of cash so they can easily expand their businesses internationally and extend fresh projects. The major weakness of Ramsay healthcare limited is that this company has not capable to tackle all the challenges which is presented by the new entrants in the segment and the loss of their small market share. It has also built its internal feedback but directly focuses on the sales team.

When it comes to the upcoming prospectus of this sector, the Ramsay healthcare sector in Australia is estimated to continuously expand its services as well as enhanced its demand for healthcare services. In contrast to the other player in this sector, this company is one of the well-established organizations and provide the main advantage to the people as well as tackle all the challenges.

Investment and Financing Decisions made by Ramsay health care

Many investment decisions are helpful to maintain their expansion strategies and business operations (Harford, Kecskés & Mansi, (2018). The following example represents Ramsay healthcare limited investments decisions are as follows:

Acquisition: Ramsay healthcare limited secured its contract to acquire Elysium health care. This is one of the main acquisitions of the United Kingdom's independent mental health care providers for $ 775 billion from private equity. It is a very lengthy procedure to identify strong synergies and excellent potential for cross-collaboration. The financial position is very important for both organizations to extend their business operations and growth.

Capital expenses: Ramsay healthcare limited maintain its expenditures only to invest in buildings, hospitals, and upgrading present facilities. For instance, an organization currently invested $ 80 million in the upcoming project to build fresh hospitals in Australia.

Divestiture: This healthcare limited company optimizes its portfolio of assets. In the year 2019, this company sell its venture to Ramsay Darby healthcare limited because this type of joint venture mainly focuses on the core business operations in Australia, Asia, and Europe (Zahera & Bansal, (2018).

It is concluded that this healthcare limited company made a proper strategic investment decision to support its business operations and growth internationally. This healthcare limited company have a strong record of delivering its worth to investor by investing in any operation.

Corporate Governance of Ramsay health care

The main principles and recommendations of corporate governance practices for the organization are listed on the Australian stock exchange and meet the reasonable expectations of most shareholders in most situations. If there is a higher standard of Ramsay healthcare limited of corporate governance, it only through strategic planning, risk management, responsibility, and transparency (Ady, (2019).

Management of risk: Some hazards represent identifying, measuring and managing the hazard by using critical frameworks and practices only to review the efficiencies regularly.

Code of conduct: This Company maintains its highest standards according to the code of conduct and outlines all the expectations that are reasonable for Ethical behaviours by workers, contractors, and owners. The code of conduct is directly related to rules, regulations, compliances, and respect for the right of humans.

Ethics and ethical judgments

There are many measures should be taken by Ramsay healthcare limited to maintain their business operations and incorporated a high level of ethics (Aguilera, Aragón-
Correa, Marano & et.al. (2021).

Ramsay healthcare's code of conduct is a statement to share some worth of the organization and defines the standard of behavior which is connected with Ramsay healthcare. A code of conduct set reasonable expectations like how people should behave towards others and guide us. Many examples represent the commitment to ethical judgments of Ramsay healthcare limited as follows:

Corporate social responsibility: The corporate social responsibility of Ramsay healthcare limited mainly focuses to create healthy individuals, strong cities, and a thriving world. It is also making an optimistic difference through health care which is very innovative, sustainable, integrated, and delivered in the Ramsay way.

Sustainability strategy: Ramsay care's sustainability is a very significant part of people, patients, doctors, and success. They maintain their strong corporate governance practices and sustainability goals to support the delivery by 2030 business strategy.

It is concluded and observed that corporate social responsibility is directly reflected strong culture within the organizations and in providing the proper services to patients or people. When it comes to sustainability strategy by 2030, healthcare limited maintain its ethical judgments and commitment to transparency only to make sure that it will always remain a top priority in all aspects of business operations (Bhardwaj, Chatterjee, Demir & et.al. (2018).

Corporate Social Responsibility

Corporate social responsibility in the healthcare industry's main aim is to enhance long-term incomes and investors' trust through public relations. It also accomplishes its high moral standards by taking responsible actions and there is no right that the company to practice corporate social responsibility (Liao, Lin & Zhang, (2018). There at 3 activities represents that corporate social responsibilities such as surrounding, society, and workplace.

Society: This corporate social responsibility represents society's benefits support that provides economic sustains to restricted organizations and charity funds. This type of funds is also supported by involvement from the organization, and hospital as well as creates a wide range of initiatives including education programs, research in medicals, social welfare schemes, and health care programs.

Surrounding: Healthcare limited understands the significance of environmental stability and implements many initiatives only to decrease the environmental impact. This company maintains its environment-sustainable strategies including targets, decreasing carbon footprints, usage of water, and minimizing their waste.

Workplace: It represents that this company provides proper services for its workers and implements initiatives to support the well-being of society. It includes health and wellness programs, assistance programs, initiatives, and working arrangements. This health care limited support inclusion and variety in their workplaces so they can easily implement as well as invest in many opportunities or avoid favoritism.

It is concluded that Ramsay healthcare company ensure that corporate social sustainability in the year 2022 mainly focuses on decreasing greenhouse emissions against climate change, decreasing energy, and usage of water, reducing resources including single-use plastic, increasing recycling, and workers with us suppliers are more sustainable product choices.

Investors

There are many investors of Ramsay healthcare limited such as Vanguard Investment Australia limited, BlackRock investment management, investor’s mutual limited, and schroder investment management Australia Limited. This company is listed on the Australian stock exchange which allows shareholders to invest in this organization diversely.

Vanguard investments Australia Limited is one of the biggest investment administration organizations which offer a wide range of investment options and valuable insights to everyday shareholders and financial advisors.

Blackrock capital investments management gives middle market organizations with flexible financing solutions including junior and seniors, secured and unsecured loans. It is a good investment company.

Schroder plc is an international asset Management Company that was founded in the year 1804. Schroder is an investment manager who gives broad expertise across the private and public marketplace.

1. Ratio Analysis

9.1 Liquidity: The term liquidity ratio is a type of financial ratio that is helpful to identify the organization's capability to pay short-term obligations or not.

The above table demonstrates that the current asset ratio of Ramsay healthcare limited is 1.44 which indicates the organization had 1.44 current assets for every dollar 1 of current liability. Moreover, in the year 2022, the current ratio has decreased to 0.88 which indicates the organization faces difficulty to pay short-term obligations (Chen, Shen, Kao & et.al. (2018).

When it comes to the quick asset ratio, Ramsay healthcare's limited asset ratio is 1.33 which indicates that the organization had 1.33 quick assets. But in the year 2022, it has decrease to 0.78 which indicates that the organization faces difficulty paying short-term debts.

9.2 Non-current Asset management efficiency: Non-current assets defined the long-term investment opportunities whose worth is not usually realized within the accounting year.

The above table demonstrates that the non-current asset management ratio of Ramsay healthcare limited represents the net worth ratio that is 3.46% which indicate organization had 3.46 of non-current assets for every 1 of net worth. Moreover, in the year 2022, it has increased to 4.12 which indicate that the company is more invested in non-current assets.

9.3 Capital structure: The term capital structure ratio represents the combination of debt and equity which is helpful to identify the overall business operations and expansions (Hirdinis, (2019).

The above table demonstrated that the debt-equity ratio of Ramsay healthcare limited in 2021 is 2.62 which indicate that the organization had 2.62 of debt for every 1 of equity. In the year 2022, it also enhanced to 2.72 which indicates the organization has taken more debt.

In the case of debt to asset, the ratio represents that it remains constant at 0.55 which indicates that the company was financed by debt.

9.4 Profitability: The profitability ratios is a financial metrics that is helpful for the organization's capability only to generate more earnings related to income, operating price, balance sheet, and shareholders' equity (Husain & Sunardi, (2020).

It can be interpreted that the net profit ratio of Ramsay healthcare limited is 3.64% indicates that the firm net profit is 3.64 in every $ 100 of sales. In the year 2022, it is reduced to 2.09% indicating that the organization's profitability has reduced.

When it comes to the gross profit ratio, this ratio represents Ramsay healthcare limited is 3.64% which indicates that the company earned a gross profit for every $ 100 of sales.

It can be interpreted that the return on equity ratio measures the net profit of Ramsay healthcare limited which is 11.13% indicating that the organization earned
11.13 in net profit for every 100 of investor's equity. In the year 2022, it is reduced to 6.97% indicating the organization has reduced.

9.5 Market value

The price-earnings ratio measures the market cost per share of an organization's relative to earnings per share. The earnings per share of Ramsay healthcare limited decreased by 66.38% which indicates the organization issues fresh shares directly affects the earnings per share negatively (Easton, McAnally, Sommers &et.al. (2018).

9.6 Overall performance, financial status, and cash flow

The overall performance of Ramsay healthcare limited is very strong because they maintain their financial performance and income better in contrast to other companies. In the year 2021, the financial positions of Ramsay healthcare limited represent a 5.1% enhancement from the past year. They maintain their cash flow effectively which enables the organization funds expansion initiative and invest in many hospitals.

The financial status of Ramsay healthcare limited is good because they maintain its balance sheet, revenue statement, and flow of cash effectively. This company's flow of cash in the year 2021 is 1.1 billion.

9.7 Suggestions to improve based on the ratio analysis

There are many recommendations and suggestions to develop financial performance by using ratio analysis which is described below:

Profitability ratio: Ramsay healthcare limited mainly focuses to increase profitability and productivity within the business as well as control their price (Palepu, Healy, Wright & et.al. (2020). Company should control the expenditure in operating and non-operating manner and focus to increase the profit.

Liquidity ratio: This ratio represents the short-term obligations where organizations accomplish their flow of cash efficiently and manage their level of working capital. Company need to improve the credit policy.

Debt management ratio: This type of ratio is very helpful for Ramsay health care limited because the main purpose is to differentiate between the debt and equity as well as accomplished the debt maturity. Company need to reduce the debt capital to reduce the capital risk.

Efficiency ratio: This type of ratio is mainly focused to develop their effectiveness by the use of assets in various hospitals and utensils. Implement new technologies and developed their operational efficiency effectively.

2. Working Capital Management

Working Capital management plays a crucial role in every organization because it is helpful to collect payments from clients and convert inventory into sales. It indicates that organizations did not perform effectively as a source of short-term financing. Moreover, it plays a very significant part for Ramsay healthcare limited because they offer long-term cash due to the nature of the organization(Boisjoly, Conine Jr & McDonald IV, (2020).

Generally, if working Capital management may seem negative then it is not common for the healthcare limited because it is to be evaluated in the case of sector norms and industry. The organization also developed its working Capital management to collect payment from the clients and improve the collection procedure effectively.

3. Conclusion

From the above information, it is concluded that Ramsay healthcare limited is one of the well-known organizations that provide better services to their clients. They maintain their strong financial positions in the market and maintain their cash flow, balance sheet as well as revenue statement effectively. This company tackles many challenges to manage its working capital inventory and account receivable. Ramsay health care's limited debt increases day-by-day but they also developed their financial positions within the organization. It mainly focuses on decreasing the level of debt. Generally, this company has a strong position and strong culture which give an important impact on expansions and business operations.

References

Annual report of the company ahs been retrieved from https://www.ramsayhealth.com/en/investors/results-and-reports/

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