AssessmentMicrosoft Word - Final Main Assessment BUSN104 All campuses Main 202030.docx 1 ...

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AssessmentMicrosoft Word - Final Main Assessment BUSN104 All campuses Main 202030.docx   1     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:   23.59 AEST, Friday 5 June via Turnitin.  Submission Instructions:  Upload as Microsoft Word Document.                                    Copy 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  https://www.ramsayhealth.com/common/emag/rhc/annualreport2019/RHC-Annual-Report- 2018-2019sml.pdf  Source 2: Yahoo Finance Ramsay Health Care historical share and dividend data  https://au.finance.yahoo.com/quote/RHC.AX/financials?p=RHC.AX  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 brief example  using in-text referencing Harvard Style.        (3 marks)    b) Based on Note 7b what type of (non-current) 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?            (3 marks)     c) Ramsay Health Care reports all its economic activities in monetary terms. In which currency  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?          (10 marks) 2  PART B: Decision making – 20 marks  Ramsay Health Care’s NSW division is considering the purchase of two new MRI machines for its  base 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  inflow.  • Superior Equip Supplies is a global company. No 1 Medical Supplies is a Tasmanian  company.    a. What type of investment decision is Ramsay making? What are some of the reasons why firms  make investment decisions?           (3 marks)  b. In the decision-making process, briefly 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.       (2 marks)  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?               (5 marks)      END OF ASSESSMENT

Neenisha · Accepted Answer

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 b
According to Note 7b company is using Lease Liabilities and Bank Loans as a part of Non-Current 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 Currency
Ramasay Health Care reports the financial Reports in Australian Dollars. While the company’s offshores, operations are in different currency.
Because of the difference in the currencies, the value of the future cash flows will differ. To reduce this risk company hedges against this foreign currency risk by entering into currency 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 breakup 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 current 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
	 
	2019
	2018
	Inventory
	 $                                               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.

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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