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Case Study: Nawaloka Hospital PLC

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Task 01 (a) Nawaloka Hospital PLC Nawaloka Hospital PLC is a listed company in Colombo Stock Exchange (CSE) under Healthcare industry sector. It was founded by Deshamanya H.K. Darmadhasa in 1985. Nawaloka Hospital PLC was the first private hospital in Sri Lanka which embraced the recognition as the centre of Excellence and the greatest healthcare institution in Sri Lanka. In the long journey of Nawaloka Hospital PLC, the company was able to introduce the first CT scanner and first Cardiothoracic Unit in Sri Lankan healthcare industry. And also the company was known to be the one of the largest employment producer in private sector since the company has its own Nursing training school. Nawaloka Hospital PLC comprise of three subsidiaries and …show more content…

The increase in gross profit margin from 2012 to 2016 denotes that the company has been successful enough in maintaining the cost of the service provided. Nawaloka hospital PLC has been efficient in using its raw material and labor in its supply of the healthcare service. So it is clear that the company is making reasonable gross profit on its sales revenue. The net profit margin is where it shows the amount of profit generated to the company’s sales revenue. The net profit margin is a fluctuating figure for past five years in the company. There is an increase of 4% in the NP margin from 2012 to 2013 but from 2014 to 2016 the NP margin is decreasing. In 2016 the NP margin shows negative figure since it reports a loss in the financial year. This might be due to the increase in the operating expenses, depreciation and other fixed costs or this might be due to some pricing problem. Since NP margin is ratio which includes all the cost of the company unlike the GP margin it shows a close picture of the profitability of the …show more content…

However from 2012-2014 it shows a lower value than the accepted value. Capital structure ratios Nawaloka Hospital PLC’s capital structure ratios are as follows. Ratio 2016 2015 2014 2013 2012 D/E 3.21 1.78 0.83 0.58 0.16 Interest cover 0.57 1.35 1.27 2.35 5.86 Debt and capital are the main sources of financing a business. Debt to equity ratio denotes the amount of debt raised against the shares issued. Most of the companies like to raise debt capital since it brings tax advantage to the company. When looking at the debt to equity ratio of Nawaloka hospital PLC it is clear that the debt capital of Nawaloka Hospital PLC has increased over time compared to its share capital. If this is above the industry average of gearing, it will be a threat to investors. Interest cover is used to determine how the interest can be paid off using it earnings before interest and tax. The interest cover of Nawaloka Hospital PLC has been decreased over time. This is due to the lower EBIT generated in the financial years. Financial Performance of Lanka Hospitals Corporation PLC Profitability Profitability measures for Lanka Hospitals Corporations are as follows. Measure 2016 2015 2014 2013

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