Health Care Financial Analysis

You have been asked by a health care magazine to write a series of articles focusing on health care financial concepts. The articles will be included in five consecutive issues and will be geared towards readers with little knowledge of finance. You must ensure that the articles are both informative and engaging to your audience. You must also ensure that your articles relate financial principles to the health care industry.

The five most important characteristics for a healthcare provider is honesty, patience, empathy, responsibility, and a team player. I picked honesty because for me honesty is important because if I was the patient I would like for the nurses and doctors be completely honest with me. To be honest you have trustful. Patients should be able to always have faith in you. You always have to be honest with the patients no matter what. Honesty has a lot to do with the healthcare industry.

2. PNB Industries has 20 million shares of common stock outstanding with a market price of $18.00 per share. The company also has outstanding preferred stock with a market value of 50 million, and $500,000 bonds outstanding, each with face value $1,000 and selling at 97% of par value. The cost of equity is 15%, the cost of preferred is 12% and the cost of debt is 8.50%. If PNB’s tax rate is 40%, what is the WACC?

Essential healthcare management includes the financial growth and feasibility of the health care organization. In order for a healthcare organization to reach its full potential it needs to be fully staffed with both medical and managerial professionals, as well as having the funds to invest in the most up to date technology. According to the Kaiser Family Foundation “Baseline estimates show that over 41 million individuals were uninsured in 2013, 61% of uninsured adults said the main reason they were uninsured was because the cost was too high or because they had lost their job”. The EMTALA or Emergency Medical Treatment And Labor Act or anti-dumping law was enacted in 1986 it was designed to prevent hospitals from transferring the uninsured or Medicaid patients to public hospitals without providing a medical screening examination to ensure they were stable for transfer first. Regardless of their options to pay, they are to be seen and treated with life-saving and "stabilizing" emergency care with transfers to advanced trauma centers, if need be. Effective Human Resources coupled with a balance between cost and revenue are essential to being able to provide quality Health Care. It has been proven these elements all play positive roles in contributing to the overall efficiency of the system. An organization can enhance the quality of health care provided just by focusing on the major components.

Therefore the annual interest rate is 8% and the effective annual rate compounded quarterly is 8.24%

However, the Walgreens’ capital structure is similar to its stronger competitor CVS’ capital structure that I defined as the benchmark. CVS has a total liabilities and shareholders’ equity of $54,721.90, where total debt is $23,400 representing the 42.76% and total equity is $31,321.90 which represents 57.24%. Moreover, if we compare 2006 results to 2007, I realize that capital structure

Citizen Kane (Orson Welles, 1941) is an American drama film that narrates the story of a newspaper magnate who gained worldly success in his life, but he lost connection with people around him during this process. With the help of a series of flashbacks, the film illustrates Kane’s personal life. The film starts with the scene where Kane is on his deathbed and says the word ‘Rosebud’ before dying. A newspaper reporter, Thompson gets intrigued by this word, which becomes the motivation for him to learn about the life of Charles Foster Kane and the significance of the word ‘ Rosebud’. The director, Orson Welles depicts the personal life of Kane beautifully in

The mixture of debt-equity mix is important so as to maximize the stock price of the Costco. However, it will be significant to consider the Weighted Average Cost of Capital (WACC) as well so that it can evaluate the company targeted capital structure. Cost of capital (OC) may be used by the companies as for long term decision making, so industries that faced to take the important of Cost of capital seriously may not make the right choice by choosing the right project(Gitman’s, ).

Moreover, let’s calculate the Weighted Average Cost of Capital (WACC). And in order to calculate it we need to know the capital structure of the company. Knowing the capital structure of the

The health sector is among the most important sectors in the United States economy. The government has enacted certain laws that affect the corporation’s activities and the insurance industry in general. The regulation affects competition among the health insurance companies, and the insurance industry in general.

DebtThe first component of a firms WACC is its cost of debt. This is the effective rate that a company pays on its current debt. Because interest expenses on debt are deductible, the after-tax cost is used in its calculation. Cost of debt is calculated by multiplying the before-tax rate by one minus the marginal tax rate. As given in the Silicon Valley case assignment handout, SIVMED's long-term debt consists of 9.5% coupon, semiannual payment bonds with 15 years to maturity. The bonds last traded at a price of $891.00 per $1,000 par value bond. Given this data, SIVMED's cost of debt is calculated at 6.6% .

If company doesn’t have any debt, it means that WACC is equal to cost of equity.

Kd (Wd), Ke (We) and Kp (Wp) are the costs (weights) associated, respectively, with the firm’s interest bearing debt,

In order to calculate MCI’s current WACC, you must first determine the cost of equity. Due to the high rating of the proxy company’s bonds, we are assuming that the debt beta is negligible in this calculation. Therefore, unlevering the equity betas of the proxy companies at yields an average asset beta of 1.06. Levering this asset beta at MCI’s current debt-to-equity ratio (which we are assuming is the target ratio for this calculation) yields an equity beta of 1.19 for MCI. See chart below for calculation.

Pfizer has used the proper equity structure to finance their company. Pfizer's debt/equity ratio is .12 which is far below S&P 500 average of 1.07.