Primary Healthcare Limited is one of the leading healthcare company in the Australian market, which is listed in the Australian stock exchange. The company has the objective of providing good health service and support the health practitioners in healthcare sector. This report contains the analytical review of debt structure, stock valuation, cost of capital and market analysis of the company’s financial position and performance. We have taken the financial and market data from various sources to complete this report. The financial structure of company are critically analyzed based on available information. In summary, the financial position of the company is satisfactory, as it is being able to sustain in such a competitive market. The company …show more content…
Similarly, the other financial data of company is tabulated below: Particulars 2017 2016 2015 Revenue 1,658.6 1,641.9 1.579.7 Earnings/ Net profit before Abnormal items 74.9 74.7 127.5 EPS in cents Excluding abnormal items 17.7 14.4 24.9 Dividend Per share in cents (Actual) 10.6 12 20 Here, the revenue is increasing at decreasing rate, earnings have no visible trends and Dividend per share is also decreasing. It shows that the company is in recession stage. The abnormal items are excluded from the Earnings for the fair comparison of the performance. The abnormal item includes non-cash impairment loss on goodwill and other assets for the year ended 30 June 2017. Calculation of Value of Stock We can use different methods to calculate the value of stock. Comparable approach Under P/E Ratio model, market price is the product of earnings per share and cost of equity. Market Price per share=Earnings per share×Cost of Equity Particulars Details Cost of Equity 6.11% Earnings per share excluding abnormal items 17.7 Market price per share …show more content…
In this market, it is competing with the companies like Sonic Healthcare Ltd, Ramsay Healthcare Ltd, ResMed Healthcare Ltd and other related companies. For the purpose of market comparison, in absence of market data readily available, we have calculated the average of four companies under healthcare industry. This average reflects the financial structure of the healthcare industry. There are many bigger companies in the Australian Healthcare market whose financial performance is relatively better than Primary. The return on investment of company is approximately 4% and market is 8.75%. This shows the performance of company is not up to the level of market average. The capital structure of the company is composed of 32% debts, which is inconsistent with that of market having 40.25% debt structure. The shareholders return of company for the period ended 30 June 2017 is negative since there is net loss for that