Analysis of financial and voluntary disclosure performance

PROFITABILITY RATIO 3

VALUATION RATIO 3

Appendices: 6

Introduction

Analysis of Financial and Voluntary Disclosure Performance

LIQUIDITY RATIO

LEVERAGE RATIO

(2) Interest coverage: this is the ratio that measures the company’s ability to pay the interest on its outstanding debt (Cope et al. 2013). In 2018 it was 0.914797 and in 2019 it was 0.813561 which indicates that the company is not generating the sufficient revenues to meet out their interest expenses, they need to likely spend some of its cash reserves to meet out the gap, as the low ratio can be risky for the company as lenders will likely refuse to lend money to the firms because of the risk for default in such cases are high.

PROFITABILITY RATIO

(1) Gross Profit Margin (GM Ratio): Gross profit margin is the ratio which calculates the percentage of sales that exceeds the cost of goods sold (Robinson et al. 2015) . In sonic healthcare, we can see that there is a slight increase in the gross profit margin when comparing 2018 and 2019. In 2018 the gross profit margin was 0.111341 and in 2019 it was 0.116793 which indicates that the company will have more money for paying the operating expenses and since this ratio also measures the profit from selling inventory, it can help the company can use the funds for other parts of the business.

VALUATION RATIO

Theory explaining for level of Voluntary Disclosure

In the context of sonic healthcare, the reason behind for voluntary disclosure was because of stakeholders’ interest. Sonic healthcare believe that an organization cannot achieve its goals until and unless there are able to fulfill the interest of the stakeholders. The company follows stakeholder theory where the organization cannot take a firm decision without considering the stakeholders. Hence this approach prioritizes the needs of the stakeholders. In the context of disclosure, the sonic healthcare has incentives for disclosing the information to the concern stakeholders in the form of electronic copy so that they can convivence them that they are a clarity between them regarding their expectations and the fulfillment. Through the stakeholder theory it briefs the manager how they should act morally to maintain the relationship between them. According to the van der laan and tondkar it has been found that stakeholders plays a significant role in terms of Quality of social disclosure.

Recommendation

Sonic healthcare can do differently in relation to the financial performance some of the recommendation for the company are:

Conclusion

References

Ball, Ray & Kothari, S. P. 1994. Financial statement analysis. New York: McGraw-Hill.

Cope, Anthony T et al. 2013. International financial statement analysis. 2nd arg. Hoboken, N.J.: Wiley.

Appendices:

(1) Liquidity ratio:
a) Current Ratio: Current Assets/Current Liabilities

Year	Current Assets	Current Liabilities	Current Ratio	Change	Page no.
2018	1231709	867863	1.41924359	-0.4713	AR 64
2019	1753184	1849384	0.94798268


b) Operating Cash flow to Current Liabilities (OCFCL): Operating Cash flow/ Current Liabilities

Year	Operating Cash Flow	Current Liabilities	OCFCL	Change	Page no.
2018	767920	867863	0.884840119	-0.4267	AR 66
2019	847308	1849384	0.458156878

(2) Leverage Ratio:
a) Debt to Equity Ratio (DE Ratio): Total Liabilities/ Total Shareholder's Equity
Year	Total Liability	Total Shareholder's Equity	DE Ratio	Change	Page no.
2018	3918009	4282925	0.914797481	-0.1012	AR 64
2019	4467968	5491866	0.813561001

b) Interest Coverage Ratio: Earning before Income and Tax (EBIT)/ Interest Payable
Year	EBIT	Interest Payable	Interest Coverage Ratio	Change	Page no.
2018	616981	131916	4.677074805	-0.2512	AR 62
2019	722257	163188	4.425919798

(3) Profitability Ratio:

a) Gross Profit Margin: Gross Profit/ Revenue
Year	Gross Profit	Revenue	Gross Profit Margin	Change	Page no.
2018	616981	5541371	0.111340858	0.0055	AR 62
2019	722257	6184056	0.116793412

b) Return on Assets: Net Income/ Total Assets
Year	Net Income	Total Assets	Return on Assets	Change	Page no.
2018	485065	8200934	0.059147531	-0.003	AR 62 & 64
2019	559069	9959834	0.056132361

c) Return on Equity: Net Income/ Total Shareholder's Equity
Year	Net Income	Total Shareholder's Equity	Return on Equity	Change	Page no.
2018	485065	4282925	0.113255544	-0.0115	AR 62 & 64
2019	559069	5491866	0.101799461

Workings: All the figure are in $M

(1) Liquidity ratio:
a) Current Ratio: Current Assets/Current Liabilities

Year	Current Assets	Current Liabilities	Current Ratio	Change	Page no.
2018	287.5	374.9	0.766871166	0.1173	AR 80
2019	346.5	391.9	0.884154121


b) Operating Cash flow to Current Liabilities (OCFCL): Operating Cash flow/ Current Liabilities
Operating Cash Flow/Current Liabilities
Year	Operating Cash Flow	Current Liabilities	OCFCL	Change	Page no.
2018	202.2	374.9	0.539343825	-0.2138	AR 80 & 83
2019	127.6	391.9	0.325593264

(2) Leverage Ratio:
a) Debt to Equity Ratio (DE Ratio): Total Liabilities/ Total Shareholder's Equity
Year	Total Liability	Total Shareholder's Equity	DE Ratio	Change	Page no.
2018	1307.4	1818.9	0.718786079	-0.0885	AR 80
2019	1295.4	2055.4	0.630242289

b) Interest Coverage Ratio: Earning before Income and Tax (EBIT)/ Interest Payable
Year	EBIT	Interest Payable	Interest Coverage Ratio	Change	Page no.
2018	64.6	35.1	1.84045584	1.5923	AR 78
2019	117.4	34.2	3.432748538

(3) Profitability Ratio:

a) Gross Profit Margin: Gross Profit/ Revenue
Year	Gross Profit	Revenue	Gross Profit Margin	Change	Page no.
2018	64.6	1704.6	0.037897454	0.0272	AR 78
2019	117.4	1804.5	0.065059573

b) Return on Assets: Net Income/ Total Assets
Year	Net Income	Total Assets	Return on Assets	Change	Page no.
2018	4.1	3126.3	0.001311454	0.0154	AR 78 & 80
2019	55.9	3350.8	0.016682583

c) Return on Equity: Net Income/ Total Shareholder's Equity
Year	Net Income	Total Shareholder's Equity	Return on Equity	Change	Page no.
2018	4.1	1818.9	0.00225411	0.0249	AR 78 & 80
2019	55.9	2055.4	0.027196653

3. Supplier Assessment (9 Items)
3.1 Screening
3.1a Supplier audits	1	Website 4, Page 4
	1	Website 4, Page 4
	0
	0
	0
3.1f KPIs	0
3.2 Risk assessment
	1	Website 4, Page 5
	0
	1	Website 4, Page 4
	4/9	44%
4. Supplier Code of Conduct (18 Items)
4.1 Diversity
4.1a Supplier maintaining diversity	0
	0
	1	Website 4, Page 1
	1	Website 4, Page 1
	1	Website 4, Page 1
4.2 Whistle blowing
4.2a Raising concerns	1	Website 5, Page 3
	1	Website 5, Page 3
	1	Website 5, Page 3

	1	Website 6, Page 3
4.3b Bribery	1	Website 6, Page 3
4.3c Corruption	1	Website 6, Page 3
	1	Website 6, Page 3
	0

	1	Website 4, Page 2
4.4b Compliance statement related to MS	1	Website 7, Page 49
4.4c Ethical source training	0
	0
	1	Website 4, Page 4

	13/18	72%

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