Financial Condition Analysis Report for ABC Healthcare Corporation

Financial Condition Analysis Report for ABC Healthcare Corporation

Executive Summary

 ABC has been around for thirty-plus years and has been leading the way in home medical equipment. Maria Gomez is the founder and president of ABC Healthcare Corporation; the company owns hospitals, ambulatory surgical centers, urgent care centers, and outpatient clinics. I am one of Maria’s high-performing financial analyst managers at ABC, and she has requested my help in reviewing various financial documents and making recommendations to maximize shareholder value.

Company Background

 ABC medical care has been around since 1983, driving the path of in-home clinical equipment. Initially established by Elwood Miller as a home oxygen supplier, ABC has developed to turn into Virginia’s biggest autonomous supplier of home clinical and respiratory items. We help a large number of patients receive the hardware they need and the administration they merit.

What separates us from different suppliers is our obligation to industry-driving client care, positive patient results, and teamwork. Our achievement is an aftereffect of satisfying these hopes and making each involvement in patients and medical care suppliers significant. We achieve it through our emphasis on individuals, cycles, and innovation. Our most significant resource is our kin. At ABC, our staff is comprised of talented experts, caring hearts, and, in particular, partners. Every individual knows how significant we to our patient’s lives.

Subsequently, our staff spur one another, help each other, become together, and share in the group’s prosperity. We join best-in-class programming, industry-driving equipment, and best-in-class clinical instruments to control our business. Our foundation gives our group the apparatuses they should be effective in their work and to help care for our patients.

Financial Analysis

 A financial analysis will be performed by the management crew at ABC Healthcare. This examination will be done to audit the fiscal summaries and proportions to discover the organization’s actual condition and worth. An extensive survey of the monetary proportion examination will be led and will detail how liquidity, longer-term dissolvability, evaluate the executives, and productivity sway the association. The qualities and shortcomings of ABC will be broken down. Included in this audit will be an investigation comparative with a pattern that will show the course of the association. Ultimately, a Competitive Comparative analysis will be done to show the organization’s present spot in the market contrasted with their friends and rivals by breaking down in general organization execution.

Current Ratio 2016 – 2018 0.90 – 0.92 – 0.94 Quick Ratio 0.56 Cash Ratio 0.14

Short-term liquidity Current Ratio

 Quick Ratio

Short-term solvency or liquidity ratios center around an association’s capacity to pay its lender over a brief period easily. The assessment technique decides a company’s book and market esteem. The current proportion thinks about all resources, and Quick Ratio, otherwise called an analysis, just uses resources that can be transformed into money within 90 days or less. ABC’s current ratios increased from 2016 – 2018. Such an increase generally indicates that a company is able to meet its short-term obligations. Expansions in the current ratio after some time may show an organization is developing into its ability, while a diminishing proportion may demonstrate the inverse. The industry average over a similar period demonstrated a more noteworthy capacity to make money. In correlation, the snappy proportion likewise expanded at this point in 2018 ABC Healthcare, and the business normal was moderately comparable in importance. Both could change over more resources and will be effectively changed over into money.

Long-term solvency

 Long-term solvency or liquidity ratios center around an association’s capacity to determine obligation over a more extended period. Long haul suitability thinks about the utilization of obligation to purchase more resources or a company’s capacity to acquire cash. The complete obligation proportion thinks about all obligations to the named sum for all leasers.

Times revenue procured proportion is utilized to decide an association’s drawn-out feasibility. This formula measures a company’s capacity to make interest and obligation administration installments or an all-inclusive period.

Total Debt Ratio =

Total assets – Total equity
Total assets

 

 Times Interest Earned Ratio = 

EBIT
Interest

 

		Year
	2016	2017	2018
Inventory Turnover Ratio	3.2529	3.2738	3.7368
Industry Internet services & Social media
Receivables Turnover Ratio	16.41	15.68	15.64
Industry Internet services & Social media

ABC medical consideration Debt to Equity and Times Interest Earned Ratio Analysis and Industry Average Comparison. From 2016 – 2018 ABC debt to equity ratios was on a decline.

An obligation to value proportion lower than one exhibits an even more fiscally stable business. During the same period, ABC Healthcare’s time’s interest earned ratio was 0.008. Their invested ratio expanded by almost 100% each announced year. ABC medical care’s drawn-out dissolvability is significant.

Assets Turnover

 The asset turnover ratio is a productivity proportion that quantifies an organization’s capacity to create deals from its resources by contrasting net deals and normal complete resources. At the end of the day, this proportion shows how proficiently an organization can utilize its resources for creating deals. This analysis is centered around the inventory turnover ratio, which measures how frequently a stock is sold during a period. Additionally, the receivable turnover proportion focuses on how frequently a business can transform its records receivable into money during a period.

Receivables Turnover =

Sales
Accounts receivable

 Inventory Turnover =

Cost of goods sold
Inventory

 

		Year
	2016	2017	2018
Inventory turnover ratio	12.92	12.87	14.11
Receivables turnover ratio	16.941	15.68	15.64

ABC’s healthcare inventory turnover ratio declined from 2016 – 2017, yet it increased from 2017 to 2018. The receivable turnover ratio declined from 2016-2018. Considering ABC’s medical care item offering, and it implies creating income, their capacity to turnover stock and receivables is normal in the best case scenario.

Profitability

 The profit for resources proportion or ROA quantifies how effectively an organization can deal with its resources to produce benefits during a period. The net revenue proportion shows what level of deals are left over after all costs are paid by the business. ABC healthcare ROA ratio declined from 2016 – 2017, yet it increased from 2017 to 2018. The profit margin showed similar results, a decline from 2016 – 2017 and then an increase from 2017 – 2018.

Return on assets = 

Net Income
Total Assets

 Profit Margin =

Net Income
Sales

                                                                                                                                              Sales 

		Year
	2016	2017	2018
ROA	4.08	2.78	3.10
Profit Margin	0.91	0.63	0.69

 Market Value

 The value income proportion shows what the market is happy to pay for a stock depending on its present profit. The occasions revenue acquired proportion, at times called the interest inclusion proportion, is an inclusion proportion that gauges the proportionate measure of pay that can be utilized to cover interest costs later on. The PE proportion is a straightforward method to survey whether a stock is finished or underestimated and is the most broadly utilized valuation measure.

PE =

Price per share
Earnings per share

Market-to-book ratio= 

Market value per share
Book value per share

		Year
	2016	2017	2018
Debit to equity ratio	1.83	1.61	1.43
Times interest ratio	1.69	0.98	1.21

Financial Statement Analysis

 There are numerous monetary details that clarify ABC medical care’s monetary reasonability from 2016 – 2018. For straightforwardness, the record will zero in on an Income Statement, Balance Sheet, and Statement of Cash Flows.

ABC medical care’s yearly income for 2018 was $167.94B, a 9.66% expansion from 2017. The working pay for 2019 was $1.112B, a $22.98% decay from 2018. Working pay for 2018 was

$1.444B, a 36.15% expansion from 2017. Net gain for 2019 was $0.855B, a 48.42% decrease from 2018. The total compensation for 2018 was $1.658B, a 355% expansion from 2017.

ABC medical care accounting report changes in resources and liabilities that you see on the monetary record are likewise reflected in the incomes and costs that you see on the pay articulation, which brings about the organization’s benefits or misfortunes.

ABC all out resources for 2019 were $39.172B, a 3.99% increment from 2018. The absolute resources for 2019 were $39.172B, a 3.99% expansion from 2018. Absolute resources for 2018 were $37.67B, a 6.66% increment from 2017. The investor value for 2019 was $2.993B, a 1.86% decrease from 2018. Investor value for 2018 was $3.05B, a 47.74% expansion from 2017.ABC medical care’s income explanation gives more data about money resources recorded on an accounting report and is connected, yet not the same, as to total compensation that appeared on the pay proclamation. Etc.

ABC medical services’ yearly total compensation/misfortune appeared on the pay proclamation for 2018 was $1.616B, a 343.34% expansion from 2017.net pay/misfortune for 2019 was $0.854B, a 47.14% decay from 2018.

Conclusion

 Nobody’s fiscal summary recounts the total story. Yet, joined, they give exceptionally amazing data to financial specialists. Also, data is the speculator’s best instrument with regard to contributing shrewdly.

Reference

 AmerisourceBergen Income Statement 2005-2020: ABC. (n.d.). Retrieved January 24, 2021, from the https://www.macrotrends.net/stocks/charts/ABC/amerisourcebergen/income- statement?freq=Q

ABC | Accounts Receivable Turnover Chart and History 2009-2020 | DiscoverCI. (2020).

Retrieved January 24, 2021, from https://www.discoverci.com/companies/ABC/accounts- receivable-turnover

AmerisourceBergen: ABC – Ebit. (2020). Retrieved January 24, 2021, from https://tradingeconomics.com/abc:us:ebit

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Create a 3-5 page report that analyzes financial ratios for a company, uses the data to tell the financial story of that company, and concludes with a recommendation on whether the company would be a viable partner based on its financial condition.

Introduction

It’s essential for senior management to know the financial condition of an organization in order to make strategic decisions. In this assessment, you will apply the financial management skills learned thus far.

• Tell the financial story based on financial statements.
• Conduct financial analysis and identify focus areas for enhancing shareholder value.
• Interpret ratio computations that are meaningful and inform business decisions and strategies.
• Make three recommendations that maximize shareholder value.

Scenario

Maria Gomez is the founder and president of ABC Healthcare Corporation, a company that owns hospitals, ambulatory surgical centers, urgent care centers, and outpatient clinics. She has called on you to review various financial documents and to make recommendations to maximize shareholder value.

Your Role

You are one of Maria’s high-performing financial analyst managers at ABC Healthcare Corporation, and she trusts your work and leadership.

Requirements

Here is what your report should provide for Maria:

• A summary of the financial strength of the company through your analysis of the price/earnings and price/book ratios.

See attached for information

The price-to-book ratio (P/B ratio) compares a firm’s market capitalization to its book value. It’s calculated by dividing the company’s stock price per share by the book value per share. Here, for the fiscal year 2019, the book value per share ratio was 0.42. This explains that investors were willing to pay $0.42 for $1 of book value equity. Price to book value is an important measure to see how much equity shareholders are paying for the net assets value of the company. P/B ratios under 1 are typically considered solid investments.

• Based on your analysis, what is your general perception of the company’s financial strength? Is it performing well, given industry standards? How does it compare to its closest rival, HCA Healthcare? What information do you need in order to conduct such an analysis?
• Given your review, how can it maximize shareholder value? What are the focus areas for enhancing shareholder value in the long term? What short-term steps might be necessary for longer-term gains?
• In your analysis, you may choose to look at competitive data. You may calculate ratios to gain a true comparison.
• After conducting your analysis, provide at least three recommendations to Maria that maximize shareholder value.

Deliverable Format

Create a report that tells the financial condition of this company. Your report should provide information on the following:

• Analysis of the financial statements.
• Evaluation of the true condition and valuation of the company.
• Recommendation of actionable items for the company based on the financial analysis.

Financial Condition Analysis Report Requirements:

Remember that you’re preparing a professional document meant for executive leadership with limited time.

• Title Page.
• Executive Summary.
• Company Background.
• Overall Financial Analysis.
• Financial Ratio Analysis.
• Trend Analysis.
• Competitive Comparative Analysis.
• Recommendations.
• Conclusion.
• References.
• Appendix (if you have additional data, reports, charts, et cetera, to support your analysis).

Additional Requirements:

Your report should follow the corresponding MBA Academic and Professional Document Guidelines, including single-spaced paragraphs.

• Ensure written communication is free of errors that detract from the overall message and quality.
• Format your paper according to APA style and formatting.
• Use at least three scholarly resources.
• Length: Between 4-6 pages of content, beyond the title page, references, and appendices.
• Use 12 point, Times New Roman.

Evaluation

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies through corresponding scoring guide criteria:

• Competency 1: Apply the theories, models, and practices of finance to the financial management of an organization.
  • Analyze financial ratio analysis, trend analysis, and competitive average analysis.
• Competency 3: Apply financial analyses to business planning and decision making.
  • Evaluate the provided financial statements of the firm to find its true condition and valuation.
• Competency 4: Use data to support evidence-based financial decisions.
  • Develop actionable items and conclusions, based on the analysis, recommending at least three ways to maximize shareholder value.
• Competency 5: Communicate financial information with multiple stakeholders
  • Tell the current financial story as to the overall health of the firm as it relates to current valuation and the future prospects of the company. Identify focus areas for enhancing shareholder value for the long term. Note what short-term steps might be necessary for longer-term gains.