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Hospital Corporation of America Rovi Das ACG2021.080

Hospital Corporation of America Rovi Das ACG2021.080. Executive Summary.

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Hospital Corporation of America Rovi Das ACG2021.080

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  1. Hospital Corporation of AmericaRovi DasACG2021.080

  2. Executive Summary There will always be a need for healthcare. This company is in the fore front in providing care to people who need it. This company is expanding but suffers from a shortage of trained employees. The company is in debt which can hurt the company but all other ratios look good. The stock has split several time in the past five years and the company recently announce an increase in dividends issued to stock holders. The profitability of this company depends on the ability of the people they treat in their hospitals to pay their bills. HCA recorded a loss in the fourth quarter because the most of the people they treated for flu symptoms could not pay their bill. This company is expanding and is in the forefront of the health care treatment industry. There will be a greater demand for the services of this company as the age of the population increases. Company’s Annual Report here: http://ir.thomsonfn.com/InvestorRelations/IRfiles/8847/pdfs/2002AR.pdf

  3. Part A. Introduction • CEO: Jack M. Bovender Jr. • Location of home office: Nashville, TN • Ending date of latest fiscal year: Dec, 31,2002. • The principal products or services that the company provides is operation and management of hospitals. • Main geographic area of activity: Nationwide.

  4. Part A. Audit Report • Company’s independent auditors: Earnest & Young . • The Auditors stated that they followed generally accepted accounting practices in the U.S. They also stated that the financial report was accurate and the responsibility of the company.

  5. Part A. Stock Market Information • Most recent price of the company’s stock: 42.30 • Twelve month trading range of the company’s stock: 27.30-46.30 • Dividend per share: .13 • Date of the above information:23 Feb 04 • Your opinion about the company stock as an investment? HOLD

  6. Part B. Industry Situation and Company Plans There will always be a need for medical care. HCA is one of the leaders in the healthcare industry. The population of the country is getting older and there is already a shortage of healthcare providers. There will always be a demand for the services this company provides. It is the largest health care treatment company in the U.S. The profits of the company are tied to people who can pay for healthcare. According to the annual report HCA has bought some hospitals in the mid west which it plans on improving. The shortage of healthcare professionals has created an need for special programs for retention and hiring. According to a recent report from myway.com’s financial section this company lost money in the forth quarter because of uninsured patients who came to the hospital because of flu symptoms.

  7. Part C. Income Statement The format most like a single-step format.

  8. Gross profit increased but both net income and income from operations decreased. They were earning more but were less profitable.

  9. Part C. Balance Sheet (in millions) Total assets, liabilities and stockholders equity increased from the previous year.

  10. Part C. Statement of Cash Flows Cash flows is from operations is more than net income for the past two years. The company growing through investing activities, like buying property, plant and equipment. The company’s primary source of financing is stock sales. Overall, cash has increased over the past two years.

  11. Part D. Accounting Policies The significant accounting policies, relating to revenue recognition, cash, short-term investments, inventories, and property and equipment is LIFO is used in the accounting process. The topics of the notes to the financial statements are: Accounting Policies, investigations and settlements of certain government claims, acquisitions and dispositions, impairments of long-lived assets, impairment of investment securities, income taxes, earnings per share, investments of insurance subsidiary, financial instruments, long-term debt, contingencies, capital stock and stock repurchases, stock benefit plans, employee benefit plans, segment and geographic information, other comprehensive income, accrued expenses and allowances for doubtful accounts.

  12. Part E. Financial AnalysisLiquidity Ratios For the past two years: • Working Capital: 2002- 766 million2001 957 million. The working capital of the company went down from 2001 to 2002 but is still liquid. • Current Ratio: 2002-1.20 2001-1.30. The current ratio went down from the previous year. The abilities to pay bills went down a little from the previous year. • Receivable turnover: 2002-7.75, 2001- 7.41. The effectiveness of credit policies increased from the year before. • Average days’ sales uncollected: 2002-47.1,2001-49.2. The average days it takes to collect on accounts receivable went down from the previous year. • Inventory turnover: 2002-17.97, 2001-17.2. The inventory went up from the previous year. • Average days’ inventory on hand: 2002-20.3, 2001-21.22. The average days inventory went down from the previous year.

  13. Part E. Financial AnalysisProfitability Ratios For the past two years: • Profit margin: 2002- 4.2%, 2001-5.5%. The net income from each dollar of sales has gone down from the previous year. • Asset turnover:2002-1.08, 2001-1.02. Asset turnover went up from 2001 to 2002. Assets used to produced sales increased in efiency. • Return on assets:2002-4.5%,2001-%5.4. The companies earning power went down in 2002. • Return on equity:2002-15.9%, 2001-5.4%. The profitability of stockholders investments went up from 2001 to 2002.

  14. Part E. Financial AnalysisSolvency Ratio • Debt to equity: 2002-2.17, 2001-2.60. HCA has a high debt to equity ratio. The creditors currently own this company.

  15. Part E. Financial AnalysisMarket Strength Ratios For the past two years: • Price/earnings per share:2002-81.3, 2001-21.62. The price/earnings per share went up from the previous year. This means that investors have more confidence in the company than the previous year. • Dividend yield: 2002-.003, 2001-.001. Dividend yield went up from the previous year. It is having more of a return to investors.

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