Summary: Financial Ratio Analysis

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Private hospitals are one of the fastest growing business industries in Sri Lanka. By the year of 2030, it is expected to have doubled the over-65 year population to about 18% compared to 9% in 2013 and public sector will required significant expansion of public health facilities, but the capex on healthcare has only 4% over the past years it will not be able to provide sufficient public healthcare service. Therefore the supply-demand gap of public sector will boost private sector healthcare and will play a major role in near future.
Personal care and health expenses have increased to 5.3% and increased per capita income would make people to seek more private healthcare. People tend to be more health conscious and expected skilled professionals;
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According to Drake (2010), financial statement analysis is financial statement analysis is the process of selection, evaluation and interpretation of financial data. According to Ginevicius et al (2001), financial analysis evaluates the liquidity, efficiency, profitability, leverage in short term as well as long…show more content…
This ratio analysis can be used to assess financial strength and weakness of a business as well as a platform to make financial decisions. It can also use for budgetary, future planning and comparison purposes. Once the financial ratios been calculated, non-finance background people including stakeholders, lenders, management, and investors will be able to comfortably mingle with finance statistics as it will highlight the necessary information of the company rather than go through the whole financial report. According to Fraser and Ormiston (2004) financial analysis can be categorized by four types of ratios which are liquidity ratio, profitability ratio, efficiency ratio and leverage ratios.
However, despite the advantages of ratio analysis, certain limitations will make it less meaningful. Even though it is good for evaluate the continuous past finance performance of the company, people more tend to interest in current and future performances. Ratio analysis can be misleading sometimes as the comparison of different industries and situations is not successful. Moreover, misinterpretation can be occurred as human factor and external factors are not considered in the ratio

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