Student No: 22068871

Module Code: AF6004

Module Title: Contemporary Corporate Reporting

Total Word Count: 2,037

Date of Submission: 26.05.2023

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Table of Contents
Part A ..................................................................................................................................................... 4

Section 1. Introduction ................................................................................................................. 4

Section 2. Limitation ..................................................................................................................... 4

Section 3. Profitability................................................................................................................... 4

3.1 Revenue Change ................................................................................................................... 4

3.2 Gross Profit Margin ............................................................................................................... 5

3.3 Operating Profit Margin ......................................................................................................... 6

3.4 Return on Capital Employed ................................................................................................ 7

Section 4. Efficiency...................................................................................................................... 8

4.1 Inventory Holding Days......................................................................................................... 8

4.2 Trade Receivable Days ........................................................................................................ 9

4.3 Trade Payable Days ............................................................................................................ 10

Section 5. Liquidity ...................................................................................................................... 11

5.1 Current Ratio ........................................................................................................................ 11

5.2 Quick Assets Ratio .............................................................................................................. 12

Section 6. Leverage ..................................................................................................................... 13

6.1 Gearing Ratio ....................................................................................................................... 13

6.2 Interest Cover Ratio ............................................................................................................ 14

Section 7. Investor Ratio ............................................................................................................ 15

7.1 Earning per Share ............................................................................................................... 15

7.2 Price to Earnings Ratio (P/E) ............................................................................................. 16

Section 8. Conclusion & Recommendations ........................................................................ 16

8.1 Conclusion ............................................................................................................................ 16

8.2 Recommendations............................................................................................................... 17

Appendices .................................................................................................................................... 17

PART B................................................................................................................................................ 26

Reference ....................................................................................................................................... 29

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Part A
Section 1. Introduction
This report provides a comprehensive analysis of Ceylon Hospital and its competitor,
Asiri Surgical Hospital PLC, to help the client make an informed investment decision.
The evaluation will focus on key financial ratios such as profitability, efficiency,
liquidity, leverage, and investor ratios. The author will recommend investing LKR
500,000 in Ceylon Hospital PLC.

Section 2. Limitation
Analysis of company performance based on five-year annual reports is limited and
does not reflect recent developments or qualitative factors such as management
strategies, competitive advantages, or future growth prospects. Comprehensive
evaluation requires more data and understanding of the organisation.

Section 3. Profitability
3.1 Revenue Change

REVENUE GROWTH 2018 - 2022

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%

-10.00%
2018 2019 2020 2021 2022
Ceylon Hospital 8.40% 1.30% 2.90% -7.20% 41.40%
Asiri Surgical Hospital 13.60% 6.10% 5.20% 15.70% 38.00%

Figure 01: Revenue Growth between 2018 – 2022

The The COVID-19 pandemic had a significant impact on healthcare, resulting in

decreased patient volumes, postponed or cancelled procedures, changes in
healthcare utilisation patterns, and financial difficulties and reimbursement issues.

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This may have resulted in a decline in patient visits, elective procedures, and other
healthcare services, resulting in a drop in revenue. In 2022 Ceylon Hospitals PLC
recorded a significant increase in turnover, registering 7.8 billion rupees compared to
5.5 billion rupees in the previous fiscal year. Additionally, Durdans, a wholly owned
subsidiary of Ceylon Hospitals PLC, took steps to reduce costs by introducing cost-
cutting initiatives such as reducing worker remuneration, overtime, and
administrative expenses. Comparing the revenue growth between Ceylon Hospital
and the competitor for the years 2018 to 2022, the following observations can be
made: Ceylon Hospital has growth in 2018 (8.40%), 2019 (1.30%), and 2020
(2.90%), but experiences negative growth in 2021 (-7.20%) and significant growth in
2022 (41.40%).

The competitorhas had consistent growth in all years, with growth rates ranging from
5.20% to 38.00%. Both hospitals achieved positive revenue growth, but Ceylon
Hospital had higher growth rates in 2018 (8.40%) and 2022 (41.40%) compared to
The competitor(13.60% and 38.00% respectively).

3.2 Gross Profit Margin

GROSS PROFIT MARGIN 2018 - 2022

Ceylon Hospital Asiri Surgical hospital

70.00%

60.00%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%
2018 2019 2020 2021 2022
Ceylon Hospital 59.60% 62.44% 64.46% 63.00% 63.27%
Asiri Surgical hospital 38.50% 38.90% 38.00% 37.10% 42.10%

Figure 02: Gross Profit Margin over the period 2018 – 2022

Ceylon Hospital had a higher gross profit margin than Asiri Surgical Hospital over the
given period, with 59.60% in 2018 and 63.27% in 2022, while the competitor had a

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lower margin of 38.50%. Both hospitals experienced an increase in their margins
over time, with Ceylon Hospital's margin increasing from 59.60% to 63.27% in 2022.

3.3 Operating Profit Margin

OPERATING PROFIT MARGIN 2018 - 2022

Ceylon Hospital Asiri Surgical Hospital

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2018 2019 2020 2021 2022
Ceylon Hospital 10.90% 9.80% 9.90% 10.40% 17.00%
Asiri Surgical Hospital 14.20% 14.10% 12.60% 16.00% 24.30%

Figure 03: Operating Profit Margin over the period 2018 – 2022

Ceylon Hospital and Asiri Surgical Hospital experienced significant increases in their
operating profit margins in 2022 and 2022, respectively. In 2021/22, both hospitals
experienced an increase in patient volume or revenue per patient, leading to
increased profitability. Ceylon Hospitals PLC profited from this demand by providing
PCR testing facilities, COVID-19 wards, and intermediate care clinics. Cost-cutting
measures and streamlined operations were implemented to reduce expenses,
increasing their profit margins.

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3.4 Return on Capital Employed

RETURN ON CAPITAL EMPLOYED 2018 -

2022
Ceylon Hospital Asiri Surgical Hospital

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2018 2019 2020 2021 2022
Ceylon Hospital 11.00% 9.40% 8.60% 6.72% 13.52%
Asiri Surgical Hospital 10.41% 10.85% 7.49% 9.37% 19.22%

Figure 04: Return on Capital Employed over the period 2018 – 2022.

Ceylon Hospital and the competitor experienced a significant increase in ROCE in

2022 due to factors such as an increase in patient volume, expansion of services,
market demand, effective cost management, and financial management practices.
Both hospitals have implemented measures to improve their operational efficiency,
such as optimizing resource allocation, streamlining processes, and reducing costs
of controlling operating expenses.

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Section 4. Efficiency
4.1 Inventory Holding Days

INVENTORY HOLDING DAYS 2018 - 2022

Ceylon Hospital Asiri Surgical hospital

70

60

50

40

30

20

10

0
2018 2019 2020 2021 2022
Ceylon Hospital 42 38 59 37 31
Asiri Surgical hospital 19 12 14 18 19

Figure 05: Inventory holding days over the period 2018 - 2022. (Table data represent no of days)

In 2020, Ceylon Hospital and the competitor experienced an increase in inventory

holding days due to a surge in patient admissions or an increase in surgeries
performed. The COVID-19 pandemic caused disruptions in global supply chains,
impacting their ability to procure medical supplies in a timely manner. Changes in
procurement policies, such as ordering larger quantities or adjusting order
frequencies, further affected the inventory holding days.

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4.2 Trade Receivable Days

TRADE RECEIVABLE DAYS 2018 - 2022

Ceylon Hospital Asiri Surgical Hospital

70

60

50

40

30

20

10

0
2018 2019 2020 2021 2022
Ceylon Hospital 13 14 20 14 13
Asiri Surgical Hospital 18 34 46 58 51

Figure 06: Trade Receivable Days over the period 2018 - 2022. (Table data represent no of days)

Ceylon Hospital had 13 trade receivable days in 2018, increasing to 14 in 2019, and
then decreasing to 20 in 2020. The competitor had 18 trade receivable days in 2018,
increasing to 34 in 2019, and then rising to 58 in 2021 before slightly decreasing to
51 in 2022. Delays in insurance claim processing and reimbursement, as well as
general economic conditions, can lead to longer trade receivable days.

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4.3 Trade Payable Days

TRADE PAYABLE DAYS 2018 - 2022

Ceylon Hospital PLC Asiri Surgical Hospital PLC

35

30

25

20

15

10

0
2018 2019 2020 2021 2022
Ceylon Hospital PLC 15 18 17 33 21
Asiri Surgical Hospital PLC 22 23 22 31 24

Figure 07: Trade Payable Days over the period 2018 - 2022. (Table data represent no of days)

Ceylon Hospital PLC and the competitor experienced an increase in trade payable
days in 2021 due to financial difficulties caused by decreased revenue, increased
expenses, and cash flow management challenges. COVID-19 has caused
operational disruptions, decreased patient volumes, and increased safety-related
costs, hindering hospitals' ability to pay suppliers on time, resulting in an increase in
trade payable days.

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Section 5. Liquidity
5.1 Current Ratio

CURRENT RATIO 2018 - 2022

Ceylon Hospital PLC Asiri Surgical PLC

2.5

1.5

0.5

0
2018 2019 2020 2021 2022
Ceylon Hospital PLC 1.11 1.15 1.24 1.37 1.93
Asiri Surgical PLC 1.51 0.57 1.24 1.74 1.11

Figure 08: Current Ratio over the period 2018 - 2022. (Table data represent no of times)

Ceylon Hospital PLC's ratio rose from 1.11 in 2018 to 1.93 in 2022. Improved cash
flow management, working capital management, or revenue creation may explain
this. Ceylon Hospital PLC has reduced debt, optimized inventory management, and
increased cash reserves to stabilize its finances. Ceylon Hospital PLC's 2022 sales
growth may have improved its current ratio. Streamlining processes, securing
advantageous supplier contracts, and cutting unnecessary expenditures can help
improve cost management. An rise in equity financing or a reduction in debt
financing might affect Ceylon Hospital PLC's current ratio.

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5.2 Quick Assets Ratio

QUICK ASSETS RATIO 2018 - 2022

Ceylon Hospital PLC Asiri Surgical Hospital PLC

1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2018 2019 2020 2021 2022
Ceylon Hospital PLC 0.88 0.94 0.99 1.10 1.50
Asiri Surgical Hospital PLC 0.60 0.39 0.59 0.67 0.72

Figure 09: Quick Assets Ratio over the period 2018 - 2022. (Table data represent no of times)

In Ceylon Hospital PLC's ratio of liquid assets increased to 1.50 in 2022 from 0.88 in
2018. The quick assets ratio increased from 0.60 in 2018 to 0.72 in 2022. This is due
to better management of current assets, reducing current liabilities, and improving
operational efficiency and resource utilization. A greater proportion of liquid assets to
current liabilities is expected in 2022.

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Section 6. Leverage
6.1 Gearing Ratio

GEARING RATIO 2018 - 2022

Ceylon Hospital PLC Asiri Surgical Hospital PLC

70%

60%

50%

40%

30%

20%

10%

0%
2018 2019 2020 2021 2022
Ceylon Hospital PLC 21% 28% 25% 26% 27%
Asiri Surgical Hospital PLC 10% 17% 59% 59% 65%

Figure 10: Gearing Ratio over the period 2018 – 2022.

Ceylon Hospital PLC and The competitor increased their gearing ratios from 2018 to
2022, resulting in a significant increase in financial leverage. The company's capital
structure choices may alter trend patterns, and the gearing ratio trend patterns may
indicate risk tolerance and financial health variations across the hospitals. Ceylon
Hospital PLC's low growth suggests a more conservative financial risk management
strategy.

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6.2 Interest Cover Ratio

INTEREST COVER RATIO 2018 - 2022

Ceylon Hospital PLC Asiri Surgical Hospital PLC

20
18
16
14
12
10
8
6
4
2
0
2018 2019 2020 2021 2022
Ceylon Hospital PLC 6.02 5.15 6.31 7.14 18.24
Asiri Surgical Hospital PLC 17.54 12.1 5.01 3.8 6.91

Figure 11: Interest Cover Ratio over the period 2018 – 2022. (Table data represent no of times)

Ceylon Hospital PLC's interest coverage ratio increased from 6.02 in 2018 to 18.24
in 2022. This indicates improved profitability and/or cost management, resulting in
greater operational profits to cover interest expenses. However, increased debt or
interest costs could reduce the interest coverage ratio. Interest rates and economic
variables influence the interest cover ratios of both hospitals. The increasing interest
cover ratio of Ceylon Hospital PLC may indicate prudent debt and expense
management, while the declining ratio may indicate decisions to incur more debt or
invest in unprofitable ventures.

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Section 7. Investor Ratio
7.1 Earning per Share

EARNING PER SHARE 2018 - 2022

Ceylon Hospital PLC

35

30

25

20

15

10

0
2018 2019 2020 2021 2022
Ceylon Hospital PLC 11.87 9.5 11.91 16.54 29

Figure 12: Earning per Share over the period 2018 – 2022.

Ceylon Hospital PLC's earnings per share have generally increased over the past
five years, rising from 11.87 in 2018 to 29 in 2022. However, there are fluctuations in
the EPS from year to year, such as a decline from 2018 to 2019, an increase in
2020, and a further increase in 2021. Positive market trends or favorable industry
conditions could boost Ceylon Hospital PLC's earnings per share.

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7.2 Price to Earnings Ratio (P/E)

PRICE TO EARNINGS RATIO 2018 - 2022

Ceylon Hospital PLC

9
8
7
6
5
4
3
2
1
0
2018 2019 2020 2021 2022
Ceylon Hospital PLC 8.1 5.3 6.6 7.3 3.7

Figure 12: Price to Earnings Ratio over the period 2018 – 2022. (Table data represent no of times)

The P/E ratio of Ceylon Hospital PLC has decreased from 2018 to 2022, from 8.1 to
3.7. This indicates that the market's valuation of the company's earnings has
decreased over time. It may indicate a shift in the market's perception of Ceylon
Hospital PLC or investor sentiment. The falling P/E ratio does not necessarily
indicate a decline in earnings performance, but it may reflect market conditions and
investor sentiment. It is important to consider the company's earnings growth or
stability when evaluating its overall financial performance.

Section 8. Conclusion & Recommendations

8.1 Conclusion
Ceylon Hospital PLC has experienced consistent growth in total income over the
past five years, indicating an upward trend in revenue generation. Investments in
property, plant, and equipment have fueled the expansion of assets, while financial
ratios such as earnings per share, return on equity, return on assets, and net assets
per share have varied trends. Overall, Ceylon Hospital PLC has demonstrated
positive growth in terms of revenue, profitability, and expansion of assets, but may
face obstacles or endure strategic shifts that have an effect on its financial
performance.

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8.2 Recommendations
Ceylon Hospital PLC has demonstrated positive revenue growth and profitability over
the years,Considering the positive growth in revenue, profitability, and expansion of
assets demonstrated by Ceylon Hospitals PLC, it appears to be a promising
company.so the author would recommend investing in this company based on the
information analyzed. The rising total income of the company is indicative of future
business expansion. In addition, the company has demonstrated a consistent
increase in earnings per share (EPS), indicating effective management and
profitability.
Appendices
Description Formula
Profitability
Revenue Growth Revenue Growth = (Current Year Revenue -
Previous Year Revenue) / Previous Year
Revenue * 100
Gross Profit Margin Gross Profit Margin = (Revenue - COGS) /
Revenue * 100
Operating Profit Margin Operating Profit Margin = (Operating Profit /
Revenue) * 100
Return on Capital ROCE = (Operating Profit / Capital Employed) *
Employed 100
Efficiency
Inventory holding days Inventory Holding Days = (Average Inventory /
Cost of Goods Sold) * 365
Trade Recivable days Trade Receivable Days = (Trade Receivables /
Total Credit Sales) * 365
Trade Payable days Trade Payable Days = (Trade Payables / Cost of
Goods Sold) * 365
Liquidity
Current Ratio Current Ratio = Current Assets / Current
Liabilities
Quick Asset Ratio Quick Asset Ratio = (Current Assets - Inventory)
/ Current Liabilities

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Leverage
Gearing Ratio Gearing Ratio = (Total Debt / Shareholders'
Equity) * 100
Interesst Cover Ratio Interest Cover Ratio = Earnings Before Interest
and Taxes (EBIT) / Interest Expense
Investor Ratio
Earning per Share Earnings per Share = Net Income / Weighted
Average Number of Shares
Price to Earning Ratio P/E Ratio = Market Price per Share / Earnings
per Share

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PART B
Because it is essential to attract stakeholders and sustain success, organisations
devote significant resources to establishing and sustaining a positive image. This is
accomplished, in part, through impression management, which involves regulating

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the information presented to external audiences in order to positively influence their
perceptions. The Annual Report of Ceylon Hospital PLC is an illustration of how
organisations use impression management techniques to create a favourable image.
The Ceylon Hospital PLC Annual Report uses a variety of impression management
techniques to portray the organisation in a positive light. According to Rowland
(2008), negotiating cultural values is a crucial aspect of education, and Ceylon
Hospital PLC navigates this process effectively through the use of rhetorical
strategies, thematic emphasis, and selective presentation in their annual report. In
doing so, they not only communicate germane information about the organization's
financial performance, but also create an impression that is consistent with relevant
literature on organisational impression management.

Patelli and Pedrini (2014) discovered that the rhetorical tone of CEO letters to
shareholders is frequently one of sincerity, indicating that companies engage in
genuine disclosure as opposed to strategic manipulation. In the chairman's review of
Ceylon Hospital Plc, persuasive language is used to emphasise the hospital's
commitment to patient care, the significance of the Vision 2022 project, and its
determination to build a purpose-built care institution. The language is intended to
persuade shareholders and increase their faith in the hospital's future. In addition,
Wang (2016) emphasises the significance of impression management techniques in
the accounting industry for establishing a positive corporate image. To attain these
goals, Ceylon Hospital PLC includes graphs, images, and narrative strategies in their
annual report. Pictures provide a relatable visual representation of the hospital's
operations, while graphs enable readers to visualise trends and comparisons. The
cohesive flow of information ensured by narrative strategies simplifies complex
concepts for readers.

Ceylon Hospital PLC presents its financial performance data in a manner that
highlights the strengths while downplaying the weaknesses by means of syntactic
manipulation. This strategy is consistent with Edgar, Beck, and Brennan's (2018)
emphasis on the use and comprehension of external financial statements as
effective communication tools with stakeholders. The strategic placement of figures
such as revenue growth rates or profitability ratios can shift readers' attention to
these positive metrics while maintaining an air of candour about the company's
potential weaknesses.

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Brennan, Daly, and Harrington (2010) state that their exploratory research on non-
routine acquisition documents reveals the presence of impression management
strategies, such as thematic, visual, and rhetorical manipulation. In accordance with
this research, the Chairman's review in the Ceylon Hospital PLC report consistently
emphasises the hospital's response to the challenges of the COVID-19 pandemic,
demonstrating its dedication to critical care, staff well-being, and meeting the
evolving needs of patients. This emphasis on resilience and adaptability in the face
of adversity serves to reinforce the hospital's resilience and flexibility. In accordance
with the findings of Brennan, Daly, and Harrington (2010), the Chairman's review
demonstrates the use of impression management techniques to shape the narrative
discourse. In addition, in accordance with Jones, Melis, Gaia, and Aresu's (2014)
study on impression management practises in annual reports, the Chairman's review
in the Ceylon Hospital PLC report selectively highlights positive aspects of the
hospital's performance, such as revenue growth, profit after tax, and
accomplishments in obtaining JCI accreditation. In contrast, it minimises obstacles,
such as decreased regular foot traffic and Vision 2022 project delays. This selective
presentation influences the perception of the hospital's overall performance. In
accordance with the findings of Jones et al. (2014), the Chairman's review illustrates
the use of impression management techniques to present a favourable image.

According to Jones, Melis, Gaia, and Aresu's (2020b) research on reactive

impression management and retrospective sense-making in annual reports, the
Chairman's assessment in the Ceylon Hospital PLC annual report compares the
hospital's performance to that of previous periods and sets expectations for the
future. It highlights the growth in revenue and profit after tax, while acknowledging
the potential impact of a future performance that is less robust. This performance
comparison is intended to demonstrate advancement and manage expectations. In
the face of intense public scrutiny, the study's findings suggest that corporations
prefer misrepresentation by omission to favourable distortions or comparisons.
Therefore, the Chairman's evaluation is consistent with the concept of reactive
impression management and contributes to the comprehension of theories regarding
impression management.

In conclusion, the Ceylon Hospital PLC Annual Report makes effective use of
impression management techniques including syntactic manipulation, attribution

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theory, thematic emphasis, and selective presentation, as well as Performance
Comparison techniques. These strategies align with current expectations for CSR
practises and positively portray relevant financial data.

Reference
Brennan, N., Daly, C., & Harrington, C. S. (2010). Rhetoric, argument and impression

management in hostile takeover defence documents. British Accounting Review,

42(4), 253–268. https://doi.org/10.1016/j.bar.2010.07.008

Edgar, V., Beck, M., & Brennan, N. (2018). Impression management in annual report

narratives: the case of the UK private finance initiative. Accounting, Auditing &

Accountability, 31(6), 1566–1592. https://doi.org/10.1108/aaaj-10-2016-2733

Jones, M. P., Melis, A., Gaia, S., & Aresu, S. (2020). Impression Management and

Retrospective Sense-Making in Corporate Annual Reports: Banks’ Graphical

Reporting During the Global Financial Crisis. Finance, 57(4), 474–496.

https://doi.org/10.1177/2329488417712010

Melloni, G. (2015). Intellectual capital disclosure in integrated reporting: an impression

management analysis. Journal of Intellectual Capital, 16(3), 661–680.

https://doi.org/10.1108/jic-11-2014-0121

Patelli, L., & Pedrini, M. (2014). Is the Optimism in CEO’s Letters to Shareholders Sincere?

Impression Management Versus Communicative Action During the Economic Crisis.

Journal of Business Ethics, 124(1), 19–34. https://doi.org/10.1007/s10551-013-1855-

Rowland, M. (Ed.). (2008). Negotiating Cultural Values in a Learning Environment. Western

Kentucky University. College of Education and Behavioral Sciences.

Wang, J. (2016). Literature Review on the Impression Management in Corporate Information

Disclosure. Modern Economy, 07(06), 725–731.

https://doi.org/10.4236/me.2016.76076

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