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FINM7409 Financial Management for Decision Makers
Semester 1, 2025
INDIVIDUAL ASSIGNMENT
Due date: 3.00 PM, 08 May 2025 Background
Ramsay Health Care (ASX: RHC) Ramsay Australia operates 74 private hospitals, clinics, and day surgery units, making it the largest private hospital operator in the country. Their services include mental health facilities and the management of three public facilities. Additionally, they run 14 community psychology practices, hospital-in-the-home services, telehealth, and allied health clinics. Ramsay has also developed the Ramsay Pharmacy retail franchise network, which supports over 60 community pharmacies and 40 in-hospital dispensaries. Each year, Ramsay Australia admits more than one million patients and employs over 35,000 people. The company was founded in 1964 by Paul Ramsay AO.
Healius Limited (ASX: HLS) Healius Limited provides specialty diagnostic services to consumer and practitioners in Australia. The company operates through three segments: Pathology, Imaging, and Others. It offers diagnostic imaging services, private medical laboratory, and pathology services. It also provides cataract surgery, colonoscopy, gastroscopy, plastic and cosmetic surgery, skin cancer removal, IVF egg collection, and gynaecological surgery services under the Laverty Pathology, Dorevitch Pathology, QML Pathology, Western Diagnostic Pathology, Genomic Diagnostic, Vetpath Laboratory, Vetnostics, QML Vetnostics, TML Vetnostics, ASAP Laboratory, Abbott Pathology, TML Pathology, IQ, Pathology, Kossard, Gastrolab, and Agilex Biolabs; Lumus Imaging; and Montserrat brands. The company was formerly known as Primary Health Care Limited and changed its name to Healius Limited in December 2018. Healius Limited was incorporated in 1994 and is based in Sydney, Australia.
You are an assistant analyst for an investment bank. As part of a team responsible for preparing a report that sets out a complete financial analysis to the (adjusted) accounts of the above two companies, you contribute to this report by conducting financial ratio, common–size, and trend analyses of these companies’ income statements, using your knowledge from FINM7409 as well as from your independent research.
Assignment materials (available on Blackboard)
Excel spreadsheet template “FINM7409_Excel.xlsx”
This file contains the RHC and HLS income statements and balance sheets.
Use this Excel template to complete Parts (1) and (2) described below.
For background information and/or readings, you can refer to the financial reports of the two companies, available from the following links.
RHC:https://www.ramsayhealth.com/en/investors/
HLS: https://www.healius.com.au/annual-reports
You don’t need to use these reports to carry out your analyses but you may want to use them to glean any relevant information you find useful for your analyses and interpretations.
TASKS
|
Mark allocations |
|
|
Excel computations (Parts 1 and 2) |
50 |
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Essay (Part 3)
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50 |
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Total |
100 |
Part - 1 [42 marks]
Complete ratio and common-size analyses of the two companies’ income statements using the Excel template mentioned above. You are also required to fill out the missing numbers in the “Other Inputs“ worksheet.
NOTE:
Do not change the order or the name of the worksheets. Do not create any new worksheet.
For any calculation/computation, you must use formula. Hardcoded numbers will not get any marks.
It is not uncommon to see that in some cases financial ratios may vary slightly in terms of how they are defined, i.e., the same ratio could be defined in a slightly different way. For your assignment, use the definition as covered in FIMN7409 as much as possible, but if you have difficulty, you can refer to the definitions provided in the Appendix of this document.
MARK DISTRIBUTION:
Ratio analysis: 0.5 mark for each financial ratio. Total 19 marks for BOTH companies.
Common-Size analysis: 4 marks for each company. Total 8 marks for BOTH companies.
Other inputs tab:
• 0.5 mark for each correct EPS. 2.5 marks for each company. Total 5 marks for BOTH companies.
• 0.5 mark for each correct Dividend. 2.5 marks for each company. Total 5 marks for BOTH companies.
• 0.5 mark for each correct Market Cap. 2.5 marks for each company. Total 5 marks for BOTH companies.
Carry out the trend analysis for the two companies, focusing on sales revenue, operating income, and net income. Graph the trends for these metrics. Do not create any new worksheet. For any calculation/computation, you must use formula. Hardcoded numbers will not get any marks.
MARK DISTRIBUTION:
Trend analysis graph: 4 marks for each company. Total 8 marks for BOTH companies.
Using the financial ratios, common-size reports, and trend analyses you have completed in Parts (1) and (2) above, write a short essay (Word limit: 700 words) to answer and discuss the following questions:
Profitability
a) Are these companies’ profit margins changing? What do you think are the underlying causes of such changes (i.e., key drivers)? Why? How do they compare? [5 marks]
b) Are they managing overhead and administrative costs well? How do they compare? [5 marks]
c) What do you think are the most important factors explaining the difference in financial performance between the two companies over the 5-year period? [5 marks]
Efficiency
a) How well do they manage their inventories? Are inventory ratios changing? What do you think are the underlying causes of such changes? [5 marks]
b) How well do they manage credit policies? [5 marks]
c) Are you taking advantage of trade credit? Are they relying too heavily on trade credit? If so, what do you think are the implicit costs of relying too much on trade credit? [5 marks]
Liquidity and solvency (capital structure)
a) Do they have enough debt? Do they take advantage of the potential benefits of using debt? [5 marks]
b) What are they doing with the borrowed funds, e.g., investing in working capital or PPE? [5 marks]
NOTE:
The remaining 10 marks are for overall presentation in Part 3 (referencing, clarity, cohesion, etc.)
SUBMISSION
You will find 3 submission links in the folder “Assessment/Individual Assignment” on Blackboard a few days before the submission deadline:
1. Part 1 - Excel: Submit your completed Excel spreadsheet here. Your Excel file must be re- named in the following format: “Assignment_XYZ.xlsx”, where XYZ is UQ student number. For example, if your student number is 12345678, then your Excel file must be named “Assignment_12345678” . This Excel file will be marked.
2. Part 2 & 3 (Essay): Submit your essay in a single pdf document here. Name your file using the following format: “Assignment_XYZ.pdf”, where XYZ is your student number. ONLY ONE SUBMISSION IS ALLOWED. So, prepare your document carefully and only submit the final version when you are satisfied with your work.
3. Part 2 & 3 (Turnitin submission): Submit the same essay as you did in “Part 2 & 3 (Essay)” Link. The purpose of this Turnitin submission link is to check for similarity and to detect plagiarism. ONLY ONE SUBMISSION IS ALLOWED. So, prepare your document carefully and only submit the final version when you are satisfied with your work.
4. Late submission will incur penalties. A penalty of 10% of the maximum possible mark will be deducted per 24 hours from time submission is due for up to 7 days. After 7 days, you will receive a mark of 0. For submission extension, please click on the “Apply for an Extension” link in the “Financial Statement Analysis Project” section of the FINM7409 ECP.