Create a 4-6 page report that analyzes financial ratios for a comp

Create a 4-6 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 a 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 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.
The CFO for ABC Healthcare Corporation assessed the market
value by reviewing its price/earnings ratios. The price/ear nings
ratio determines the market value of a stock as compared to the
company's earnings. The price/earnings ratios are listed in the

chart below. To calculate the price/earnings ratio, the CFO took
the earnings per share and divided that into the market value.
As an example, this means that in 2019 investors were willing
to pay $12.10 for $1 of earnings.
Price/Earnings Ratio
2019
2018
2017
Market Price
83.62
83.62
83.62
Earnings Per Share
6.91
7.87
9.15
Price/Earnings Ratio
12.10
10.63
9.14
To further assess market value, the CFO looked at book value
per share. The book value per share ratio is the per share value
of a company in terms of the equity available to stockholders.
The book values per share over the past three years are listed in
the chart below:
Price/Ratio Ratio
2019
2018
2017
Market Price
83.62
83.62

83.62
Book Value per Share
199.1
209.05
226
Price to Book Ratio
.42
.40
.37
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 book value per share. Here,
for 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 focus areas for enhancing shareholder value for 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.
1. Analyze financial ratio analysis, trend analysis, and
competitive average analysis.
1. Competency 3: Apply financial analyses to business planning
and decision making.
2. Evaluate the provided financial statements of the firm to find
its true condition and valuation.
1. Competency 4: Use data to support evidence-based financial
decisions.
3. Develop actionable items and conclusions, based on the
analysis, recommending at least three ways to maximize
shareholder value.
1. Competency 5: Communicate financial information with
multiple stakeholders
4. 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.
1
6
ABC Healthcare CorporationExecutive summary
ABC healthcare give facilities for ambulatory surgery,
outpatient clinics, hospitals, and also urgent care centers. Maria
Gomez is acting as the founder as well as the president of the
healthcare facility. All above-mentioned facilities are treated as
a single entity in the finance department. All the data of
financials of the firm are treated in their own financial
statements, and after that, this financial statement helps in
preparing a consolidated account in the future. The revenue of
the firm is mostly generated from the general public, which
relates to its business. ABC Healthcare is one of the leading

healthcare service providers in the country when it comes to
providing home medical equipment. The organization
specializes in rehabilitation, medical, and respiratory
treatments, and it serves a large number of individuals. As
recorded in the annual report of 2019, financial ratios show that
investors were ready to pay $12 for the return of $1 on this
investment. When compared to the financial year 2019, the
price-to-profits ratio was lower than in previous years. As
below, it is clearly mentioned that there has been no change in
the market price of the shares of the company in the last three
years; however, the profit per share declined in the last three
years. If we talk about the price/earnings ratio, it shows an
increasing trend over the last three years. A positive trend in the
financial ratio shows that investors are happy and want to
purchase more additional shares in the company. They are
happy to obtain more operations in the company and want to
spend excess control.Company Background
The healthcare company ABC Healthcare Corporation is a
market leader. Elwood James Miller, a respiratory therapist,
established the ABC healthcare business organization in 1983.
Elwood began his healthcare business in his carport and grew it
into a reputable provider of services, reliability, and
compassion. The ABC healthcare organization is now Virginia's
biggest accredited supplier of clinical respiratory treatments as
well as personal medical equipment. This is true throughout the
sector, and ABC Healthcare Corporation works hard to fulfill
the demands of its patients, workers, as well as insurance
partners. The company is a public limited in the healthcare
industry, and it is listed on the stock exchange. There are 2000
total employees in the company hired in it. Casual employees
are part of this number of employees with 20% of the total
workers. As written in the annual report, when we see the
financial data for the last five years, we can clearly see that it
indicates that the company management put its efforts into
boosting the profit of the company. Its revenue increase year by
year. In addition, the financial part shows the increasing trend

in the wealth of stakeholders. In the healthcare sector,
Healthcare Corporation is a market leader. ABC health care
provides facilities related to ambulatory surgery, hospital,
urgent health care, and also the outpatient clinic. There are a lot
of medical intuitions which related to the company and provide
healthcare services to the customers. There is various type of
services for the customers because the company considers the
customers as the most important stakeholders of it.
This is true throughout the sector, and ABC Healthcare
Corporation works hard to fulfill the demands of its patients,
workers, and insurance partners. The overall goal and motive of
this report are not only to examine the company's financial
situation but also to give suggestions for maximizing
shareholder value. In the case of ABC Healthcare Corporation,
this will have an impact not just on direct investors but also on
the company's patients. The financial data related to the CFO of
the company will be under consideration for determining the
economic history of the company. Three suggestions will be
made once this data has been analyzed to optimize shareholder
value.Overall Financial Analysis
Companies use financial analysis to assess the economic trends,
formulate financial policies, develop the company's long-term
goals, and find the potential investment projects. (Witzel, 2012)
These all things are possible only when we combine financial
data with numbers. As a financial analyst, a person reviews all
the accounting accounts. The financial analysis would be
performed in both financial and corporate environments. The
main discussion of the report is financial reporting. Balance
scorecards are used for the estimation of whole healthcare
performance. The company's ratio analysis shows the past three
years' performance. As we can see, the market price of the share
of the company over the last three years has been the same.
From 2017 to 2019, the market price is $83.62, and there has
been no change in it. The book ratio per share increased from
2017 to 2019. Price-to-earnings ratio increased in 2019 as
compared to 2017 and 2018, which means that in the current

year, investors need to pay more as compared to the past 2
years. However, it is paramount to note that although the
overall market price has remained at a constant $83.62, the
earnings per share have decreased with each new year. This may
be directly due to an array of reasons. Firstly, the stability of
financial markets is highly influenced by the conditions in
which an organization operates (Jorion, 1991). Healthcare is
one industry that can be ascertained as quite stable, individuals
are constantly looking for medical attention, and with the global
trends toward healthy lifestyles, healthcare is a top-tier need
(Michael & Richardson, 2008). The stability of the industry is,
therefore, the main reason why the market stock market price
has remained stable.
To address the decreases in earnings per share, one could look
at the ever-increasing prices of healthcare. Healthcare has been
identified as quite expensive and financially unreachable for
most of the global population. This increase in healthcare pr ices
means that there are fewer returns for the shareholders as the
organization experiences more expenses. Secondly, healthcare
has become highly regulated by governments so as to make it
accessible (Michael & Richardson, 2008). This means that
healthcare organizations such as ABC can not constantly
increase the prices of their services. This also affects the
amount of profit that ABC can make, ultimately affecting the
returns for each shareholder.
Financial Ratio Analysis
Ratio analysis is critical for a company's financial situation,
liquidity, profitability, risk, solvency, efficiency, operational
effectiveness, and lastly, the correct use of money. (AREAS,
2018)It also reveals the overall comparison as well as the trend
of financial outcomes, which are very significant for the
shareholders to make the appropriate investment decisions as
the financials of the company show that the market price of the
company has been the same for the last three years, which is
83.62 dollars. This consistency in the market price shows that
investors of the company maintain the profitability of the shares

within the market. There are the demand and supply forces here
which indicate that when demand increase, then the price of the
products also increases, which in result decline in the supply
and vice versa.
Equilibrium is defined as the value of a company's share being
constant throughout time. Stock details of the company show
that when the public purchases the shares of the company in
bulk, then it increases the net worth of the company. This is all
due to giving the extra incentives to its shareholders that they
can pay the same cost for the added amount of shares. Inflation
plays a major role in decreasing the stock's share price, as the
company's share price is 83.62 today, but it doesn't mean it will
be the same in the future. The book ratio of the business has
jumped in the last three years. The price at which the stock
trade in the market is the market price, and these stocks are
recorded in the financial statement at par value. (Pride et al.,
2020) The par value of the stocks is usually less than its market
price. (Pride et al., 2020) As we can see, the book value of the
shares increased over the last three years, and it shows an
increasing trend. As a result of changes in the company's net
assets and ownership, this has occurred. When we divide the net
assets of the company by its outstanding shares, then we get the
book value of the share. When the book value per share rises, it
signifies the company's net assets have grown at a faster rate
than the shareholding. (Tracy, 2012) This is a good sign that the
firm can create more income without relying on shareholder
funds to invest in more assets. The reason behind the increases
in PE and PB but a decrease in EPS can be linked to the
technological advancements in the health care sector. ABC has
probably acquired the latest machinery and medications. This
has ultimately increased the net assets, positively affecting the
worth of the organization (Jorion, 1991). However, the earnings
per share may be declining as a result of these technological
advancements. Profit is going into ensuring the organization is
relevant and has the best equipment but reducing the earnings of
the shareholders.

Lastly, the Book Value Per Share will be analyzed. It is evident
that between 2017 and 2019, it has decreased to a total value of
26.9. Although the decrease is quite noticeable, it is not entirely
concerning as it is likely a result of ABC increasing its
profitability and growth through the acquisition of new
technology (Jorion, 1991).Trend Analysis
Trend analysis is a sort of basic analysis approach that aims to
forecast future stock price movements by utilizing the trend
data that has recently been seen. (Thomsett, 2019) In order to
evaluate the long-term direction of market sentiment, trend
analysis in this regard by looking at the past data, which
includes price fluctuations as well as transaction volume.
(Thomsett, 2019). Trend analysis seeks to forecast a trend, such
as a stock market run, and ride it until evidence shows a loss of
momentum, including a bull-to-bear market. Trend analysis is
considered very useful because it provides the real aspects of
the trend to investors, and the investor will therefore earn on
investment by following rather than fighting them. It is founded
on the assumption that the investors can better anticipate the
future prospects of the future happenings by examining what
has actually occurred. (Gil-Lafuente, 2005)Short-term,
intermediate-term, as well as long-term trends are really the
three main categories. The increasing trend in the book value of
the shares reveals that the company's shares have a growth rate
in fast position than its shareholder's value. A company's
management can earn more without relay on the shareholders.
Management can earn profit by efficient operations as the
financials shows that the market to book price increased from
the past 3 years to now because the market price has considered
the market value. The company gives incentives to its public
shareholders and expands its net worth of the
company.Competitive Comparative Analysis
The competitive analysis emphasizes direct rivals who offer
almost similar functionality; comparative analysis, on the other
hand, considers both active and passive competitors, especially
competitors that only offer a tiny percentage of your features.

Comparative analysis has the benefit of allocating the user to
incorporate a broad range of rivals and collect more detailed
data than competitive analysis. (Peltier, 2017) Comparative
analysis is the practice of contrasting and contrasting objects.
When a company wants to investigate a concept, a problem, a
hypothesis, or a concern, it may utilize a comparative analysis
to capture a greater understanding of the situation and develop
methods to address it. (Peltier, 2017)This sort of study might be
utilized by a business that analyzes things with evident
distinctions or items with both differences and commonalities.
Healthcare companies might use this research to distinguish two
distinct types of drugs, for example. Other firms could do a
comparative analysis to see which of the two manufacturing
methods is the most efficient. A competitive analysis is an
approach that involves studying main rivals' products, revenues,
as well as product promotion. Conducting a competitive market
study has several advantages, including strengthening corporate
strategy, warding off rivals, and grabbing market share. (Peltier,
2017) There is a need to maintain market price share. The
increase in the book value shows that the company is in a
successful condition in the market. The increase in the book
value indicates that investors have positive tensions about
investment in the company's share.
PEG ANALYSIS FOR THE YEARS 2019AND 2018
ABC
Price per share : $83.62
EPS this year : $1
EPS last year : $1
HCA
Price per share : $199.34
EPS this year : $21.16
EPS last year : $21.18
Given this information,
ABC
P/E ratio :83.62/ 1= 83.62
Earnings growth rate : 1/1 = 1%

PEG ratio : 83.62/ 1 = 1:83.62
HCA
P/E ratio : 199.34/ 21.16 = 9.42
Earnings growth rate : 21.16/21.18 = 0.99
PEG ratio : 9.42/0.99= 9.51Recommendations
It is recommended that the company needs to be more
focusing and also work hard. The company also requires a
comprehensive expansion in its operations. By expanding
operations, the company will be able to maintain an increasing
trend in the book value per share. An increasing trend in the
book value will create more value and overall expansion for the
company in the market.
Different steps can be used to achieve higher shareholder value.
Firstly, ABC is encouraged to increase its stock market price.
Increasing the stock market price gives the impression that the
organization is of high value and is a worthy investment. It also
brings about a sense of confidence in the financial standing of
the organization (Blyth, Friskey & Rappaport, 1986). When the
stock market price heightens, the shareholders get more return
as a result of increased prices as the EPS also increases.
Secondly, ABC is encouraged to ensure that its expected value
is constantly being increased. This can be through the
acquisition of any form of assets that will increase the
organization's value. ABC is in the healthcare sector, and it
would be important for them to keep up with the latest
healthcare advancements increasing the BVPS (Rappaport,
2006). Although they would be currently costly, in the long run,
they would ensure ABC is a market leader in its industry as
The third way that ABC could use to maximize shareholder
value would be to reduce the number of shareholders
(Rappaport, 2006). By acquiring their shares back, they reduce
the amount of outstanding stock. This would mean that the
remaining shareholders see an increase in their EPS.
Conclusion
Ambulatory surgery, outpatient clinics, hospitals, and urgent
care centers are all services provided by ABC Healthcare. Maria

Gomez is acting as the founder as well as the president of the
healthcare facility. In the finance department, all of the
foregoing facilities are handled as a single entity. All of the
firm's financial data is treated in its own financial statements,
and this financial statement then aids in the preparation of a
consolidated account in the future. The company's revenue is
primarily derived from its business dealings with the general
population. It indicates that investors are more concerned about
investing in the company, as well as the value of the company
in the market is high. In addition to the analytical findings, it is
evident that ABC may have to take some drastic steps so as to
ensure that its shareholders are happy. Short-term discomfort
and negativity will ultimately benefit ABC. This would be
advisable by reducing the outstanding stock, reselling the stock
again at a higher value, and limiting the number of shareholders
so as to not have the profits spread too thin (Rappaport, 2006).
REFERENCE
AREAS, B. (2018). Financial analysis. growth, 30, 10.
Blyth, M.L., Friskey, E.A. and Rappaport, A. (1986),
"IMPLEMENTING THE SHAREHOLDER VALUE
APPROACH", Journal of Business Strategy, Vol. 6 No. 3, pp.
48-58. https://doi.org/10.1108/eb039119
Gil-Lafuente, A. M. (2005). Fuzzy logic in financial
analysis (pp. 318-328). Berlin: Springer.
Jorion, P. (1991). The Pricing of Exchange Rate Risk in the
Stock Market. Journal of Financial and Quantitative
Analysis,26(3), 363-376. doi:10.2307/2331212
Michael, J. and Richardson, A. (2008), "Healthcare for All: The
Independent Inquiry into Access to Healthcare for People with
Learning Disabilities", Tizard Learning Disability Review, Vol.
13 No. 4, pp. 28-34.
https://doi.org/10.1108/13595474200800036
Peltier, A. (2017). 7-2 Final Milestone Risk Analysis Pertaining
to Cyberlaw and Ethics
Regulations of ABC Healthcare Joey Chandler Professor Alicia
Peltier IT-412–Cyberlaw and Ethics.

Pride, W. M., Hughes, R. J., Kapoor, J. R., Althouse, N. R., &
Allan, L. A. (2020). Business.
Nelson.
Rappaport, A. (2006). Ten Ways To Create Shareholder Value.
https://hbr.org/2006/09/ten-ways-to-create-shareholder-value
Thomsett, M. C. (2019). Practical Trend Analysis: Applying
Signals and Indicators to Improve
Trade Timing. Walter de Gruyter GmbH & Co KG.
Tracy, A. (2012). Ratio analysis fundamentals: how 17 financial
ratios can allow you to analyse
any business on the planet. ratio analysis. net.
Witzel, M. (2012). THE ESSENTIALS OF FINANCIAL
ANALYSIS. Corporate Finance
Review, 16(5), 46.

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