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Microsoft Word - Final Main Assessment BUSN104 All campuses Main XXXXXXXXXXdocx 1 BUSN104 Money Matters Alternative Final Assignment Peter Faber Business School Brisbane, Melbourne, North Sydney,...

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Microsoft Word - Final Main Assessment BUSN104 All campuses Main XXXXXXXXXXdocx


BUSN104 Money Matters
Alternative Final Assignment
Peter Faber Business School
Brisbane, Melbourne, North Sydney, Strathfield
Semester 1, 2020
Weight: 50%
Total Marks: 50
Due time and date: XXXXXXXXXXAEST, Friday 5 June via Turnitin.
Submission Instructions: Upload as Microsoft Word Document.
XXXXXXXXXXCopy and paste any Excel tables into the Word document
Do not write the question into your submission.
Clearly label your answers

Source 1: Ramsay Health Care Annual report 2019
Source 2: Yahoo Finance Ramsay Health Care historical share and dividend data
Part A: Financing – 30 marks

Consider the Ramsay Health Care 2019 Annual Report.

a) Does Ramsay Health Care have strategies in place to align manager and shareholder
interests at Ramsay Health Care based on the Annual Report? Provide one
ief example
using in-text referencing Harvard Style XXXXXXXXXXmarks)

) Based on Note 7b what type of (non-cu
ent) debt capital is Ramsay Health Care primarily
using to finance its long-term operations? What are the risks and benefits of using this type
of financing? XXXXXXXXXXmarks)

c) Ramsay Health Care reports all its economic activities in monetary terms. In which cu
does Ramsay Health Care report all its transactions? How could exchange rates affect
values in reports and how could this lead to problems when using annual reports as a
predictor for future financial results.
(4 marks)

d) How could managers use the annual report figures to measure budget control success?
(3 marks)
Consider the Ramsay Health Care Yahoo Finance data.
e) How has Ramsay Health Care’s ability to manage inventory changed from 2018 and 2019?
Show using calculations. Why is managing appropriate inventory a challenge for firms?
(7 marks)
f) How would investors feel about the value of their shares in Ramsay, if they purchased shares
on the 30th March 2020? What if they had purchased the shares on 30th October 2019? What
if they were original shareholders? What does that suggest about risks of investing in the
Sharemarket? XXXXXXXXXXmarks)
PART B: Decision making – 20 marks
Ramsay Health Care’s NSW division is considering the purchase of two new MRI machines for its
ase hospital in Nowra and has taken quotes from potential suppliers. Each supplier has quoted
the costs to Ramsay on a per-unit basis and the after-tax cash returns per unit from each supplier
are forecast below:

Years Superior Equip Supplies MRI (per unit)
No 1 Medical Supplies MRI
(per unit)
Initial investment Cost: $120,000 Cost: $140,000
1 $40,000 $40,000
2 $42,000 $50,000
3 $50,000 $70,500

Other information:

• Due to Ramsay Health Care’s excellent credit rating, it has negotiated a cost of financing
the machines at 8% p.a.
• The project manager in Nowra believes that each machine can be sold at the end of three
years to a community clinic for $30,000 and this would be added to the final year’s cash
• Superior Equip Supplies is a global company. No 1 Medical Supplies is a Tasmanian

a. What type of investment decision is Ramsay making? What are some of the reasons why firms
make investment decisions? XXXXXXXXXXmarks)
. In the decision-making process,
iefly explain which generally takes the longest time? (2 marks)
c. Using Excel calculate the Net Present Value of purchasing from each supplier. (Copy your Excel
table and paste it into your final submission. Do not submit the Excel Spreadsheet) (5 marks)
d. Calculate the Payback period of purchasing from each supplier XXXXXXXXXXmarks)
e. Which company should Ramsay Health Care purchase from? Explain your reasons. (3 marks)
f. When making investment decisions, what are some other issues that may influence decision-
making? XXXXXXXXXXmarks)

Answered Same Day Jun 03, 2021 BUS104 University of the Sunshine Coast


Neenisha answered on Jun 05 2021
108 Votes
Part A – Financing
A – Business Strategy
One strategy that aligns the interest of managers of Ramasay Health Care and the shareholders of the company is Growth Through Acquisitions. (Ramasay, 2020) The company is investing in growth and expansion through acquisitions because it will help the company to locate opportunities in the new markets and grow in the existing market as well. The new acquisitions will help to improve the financial growth of the company which will be ultimately reflected in the share value of the company. This will ultimately benefit the shareholders. When the company will grow and finances will improve, this will automatically be in interest of the managers of the company.
B – Note 7
According to Note 7b company is using Lease Liabilities and Bank Loans as a part of Non-Cu
ent Debt. It is using Lease options and bank loans to finance operations which are long term to the company.
Risks of these Options
· If company does not generate enough cash flows to repay the loan, then it can eb filed for bankruptcy
· If company misses any payment then the credit score of the company might be decreased.
· The property which is leased might become obsolete before the expiry of lease.
· The insurance cost is high and there is no customization available.
Benefits of these Options
· Lesser interest rate as compared to interest rate on loans provided by other institutions.
· No dilution of control of the company.
· Leasing helps against any kind of technological advancement and obsolesce.
· Interest rates on loans are fixed which makes the payment easier.
C – Exchange Rate and Cu
Ramasay Health Care reports the financial Reports in Australian Dollars. While the company’s offshores, operations are in different cu
Because of the difference in the cu
encies, the value of the future cash flows will differ. To reduce this risk company hedges against this foreign cu
ency risk by entering into cu
ency swaps. The appreciation or depreciation of the Australian Dollar will have direct impact on the financial results or he future cash flows of the company.
D – Budget Control Success
Using information given in Annual Reports, Managers can prepare budgets. The financial Statements provide enough information about the company’s revenue over the years, the
eakup of the expenses and the gross and net profit. These statements provide enough information about the cash incomings and outgoings of the company. They provide the information about the cu
ent position of the assets and liabilities of the company. Analyzing all this information, from the financial statements given in the annual reports, the managers can analyse the trend of historical performance and prepare the budgets accordingly. As the past information is very helpful in predicting the future performance of the company and setting up the budgets for the company to measure the performance.
E – Inventory Change from 2018 to 2019
     $ 3,44,796
     $ 2,76,112
The inventory of the company was $ 2,76,112 in 2018 and $ 3,44,796 in 2019. The inventory has increased in 2019 due to more purchases.
Managing appropriate inventory is important task as it...

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