FINM7409 Financial Management for Decision Makers Semester 1, 2025
1
INDIVIDUAL ASSIGNMENT
Due date: 3.00 PM, 08 May 2025
Background
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.
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.
FINM7409 Financial Management for Decision Makers Semester 1, 2025
2
TASKS
Mark allocations
Excel computations (Parts 1 and 2) 50
Essay (Part 3)
▪ Essay: 40 marks
▪ Presentation: 10 marks
50
Total 100
FINM7409 Financial Management for Decision Makers Semester 1, 2025
3
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.
FINM7409 Financial Management for Decision Makers Semester 1, 2025
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Part – 2 [8 marks]
▪ 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.
FINM7409 Financial Management for Decision Makers Semester 1, 2025
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Part – 3 [50 marks]
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.)
FINM7409 Financial Management for Decision Makers Semester 1, 2025
6
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.
IMPORTANT: The use of generative Artificial Intelligence (AI) tools will not be permitted. Any
attempted use of Generative AI may constitute student misconduct under the Student Code of
Conduct.
FINM7409 Financial Management for Decision Makers Semester 1, 2025
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Appendix
Commonly Used Asset Efficiency Ratios
Activity Ratios Numerator Denominator
Inventory turnover Cost of sales or cost of goods
sold
Average inventory
Days of inventory on hand
(DOH)
Number of days in period Inventory turnover
Receivables turnover Revenue Average receivables
Days of sales outstanding (DSO) Number of days in period Receivables turnover
Payables turnover Purchases Average trade payables
Number of days of payables Number of days in period Payables turnover
Working capital turnover Revenue Average working capital
Fixed asset turnover Revenue Average net fixed assets
Total asset turnover Revenue Average total assets
Commonly Used Liquidity Ratios
Liquidity Ratios Numerator Denominator
Current ratio Current assets Current liabilities
Quick ratio Cash + short-term marketable
investments + receivables
Current liabilities
Cash ratio Cash + short-term marketable
investments
Current liabilities
Defensive interval ratio Cash + short-term marketable
investments + receivables
Daily cash expenditures
Additional Liquidity Measure
Cash conversion cycle (net
operating cycle)
DOH + DSO – number of days
payables
Commonly Used Solvency/Capital Structure Ratios
Solvency Ratios Numerator Denominator
Debt-to-assets ratio Total debt Total assets
Debt-to-capital ratio Total debt Total debt + Total shareholders’
equity
Debt-to-equity ratio Total debt Total shareholders’ equity
Financial leverage ratio Average total assets Average total equity
Coverage Ratios
Interest coverage EBIT Interest payments
Fixed charge coverage EBIT + lease payments Interest payments + lease
payments
FINM7409 Financial Management for Decision Makers Semester 1, 2025
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Commonly Used Profitability Ratios
Profitability Ratios Numerator Denominator
Return on Sales
Gross profit margin Gross profit Revenue
Operating profit margin Operating income Revenue
Pretax margin EBT (earning before tax but after
interest)
Revenue
Net profit margin Net income Revenue
Return on Investment
Operating ROA Operating income Average total assets
ROA Net income Average total assets
Return on total capital EBIT Short- and long-term debt and
equity
ROE Net income Average total equity
Return on common equity Net income – Preferred
dividends
Average common equity
DuPont Analysis: The Decomposition of ROE
ROE = Net income/Average shareholders’ equity
ROE = Net income/Average total assets × Average total assets/Average shareholders’ equity
ROE = ROA × Leverage
ROE = Net income/Revenue × Revenue/Average total assets × Average total assets/Average
shareholders’ equity
ROE = Net profit margin × Asset turnover × Leverage
ROE = Net income/EBT × EBT/EBIT × EBIT/Revenue × Revenue/Average total assets ×
Average total assets/Average shareholders’ equity
ROE = Tax burden × Interest burden × EBIT margin × Asset turnover × Leverage
DuPont Analysis Numerator Denominator
Tax burden Net income EBT
×
Interest burden EBT EBIT
×
EBIT margin EBIT Revenue
×
Asset turnover Revenue Average total assets
×
Leverage Average total assets Average shareholders’ equity
=
ROE Net income Average shareholders’ equity
FINM7409 Financial Management for Decision Makers Semester 1, 2025
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Selected Valuation Ratios
Numerator Denominator
Valuation ratios
P/E Price per share Earnings per share
P/CF Price per share Cash flow per share
P/S Price per share Sales per share
P/B Price per share Book value per share
Per-Share Quantities
Basic EPS Net income minus preferred
dividends
Weighted average number of
ordinary shares outstanding
Diluted EPS Adjusted income available
for ordinary shares, reflecting
conversion of diluted
securities
Weighted average number of
ordinary and potential ordinary
shares outstanding
Cash flow per share Cash flow from operations Weighted average number of shares
outstanding
EBITDA per share EBITDA Weighted average number of shares
outstanding
Dividends per share Common dividends declared Weighted average number of
ordinary shares outstanding
Dividend-Related
Quantities
Dividend payout ratio Common share dividends Net income attributable to common
shares
Retention rate (b) Net income attributable to
common shares – Common
share dividends
Net income attributable to common
shares
Sustainable growth rate b × ROE
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