Lesson Module 2 financial Trends in the Healthcare Setting
Lesson Module 2
Activity 1. With your team discuss the choice of hospital to study.
As a team choose two of the hospitals to focus the analysis on.
Sacramento Regional, Sacramento, CA
Cedars Sinai Medical Center, Los Angeles, CA
Credit Valley Hospital, Mississauga, Canada
Emanuel Medical Center, New York
Sunway Hospital, Malasia
Activity 2. Perform an accurate analysis of the two company’s financial statements.*
*(information on these hospitals is readily available through an internet search).
Work together on the analyses following these quidelines: Working together on both at the same time will allow you to find similar data and to compare them.
State the names of each company you have chosen.
Obtain the company’s financial statements for the last 3-5 years. You can find these on the web. You will want to find the company’s balance sheets, income statements, shareholders equity statements (if any) and any cash flow statements. and Companies: Interpretation of Financial Statements
Conduct a quick review of all of the statements to look for big jumps or losses in any area during this period. When you come to a questionable issue, dig deeper into the change to see if you can find out why. For example, bed occupancy may have dropped off suddenly leading to decrease in revenue. You would want to find out what happened around that time and why it affected income.
Examine the balance sheet to again look for changes in assets, liabilities, or equities. Is their debt growing or have they taken measures to reduce the debt? Have they had a new infusion of capital? Research any areas of concern.
Examine the income statement. Look for trends over time. Calculate and graph the growth of the following entries over the past several years.
Revenues (sales)
Net income (profit, earnings)
What do the graphs show you? Are you seeing growth over time, a downward trending, or an erratic up and down in revenue? Is there excessive spending in any one area? Is there an unusual expense? Research and report on any unusual events.
Examine the shareholder’s equity statement. Has the company issued new shares, or bought some back? What are the stock prices doing? What does this suggest about the company? Review the dividend payouts and stock prices over time. Again, research any activity that is unusual.
Examine the cash flow statement, which gives information about the cash inflows and outflows from operations, financing, and investing. How is the company using its cash? Cost of Equity
Calculate financial ratios in each of the following categories, for each year. You can find guidance on calculating rations at .
Working Capital
Current Ratio
Quick Ratio
What do these ratios tell you about the health of the company?
Activity 3. State the results of your analysis.
Make a team report of the analyses of the two.
Activity 4. Determine the current value of the firm. What is its profitability?
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