1 Kendra Holcomb MBA-FPX 5014 Evaluation of Capital Projects April 15, 2021 2 Executive Summary As one of Maria's trusted and high-performing financial analysts' managers at the corporation to ABC healthcare, senior leadership, having been impressed with my past performances, has tasked me with analyzing three projected capital projects based on projected cash flow. This paper entails conducting an analysis, thereby recommending the project that will provide the most shareholder value to the entity. The proposed project includes project A, project B, and Project C, namely, Major Equipment purchase, Expansion into three additional States, and marketing/ Advertising campaign. The report aims to analyze every project via budgeting tools and propose which one of the three is recommended to yield more benefits to the shareholders. To make a formal decision concerning which project ought to yield most beneficial to the involved stakeholders, particularly the shareholders, this reports stand to apply capital budgeting methods to compute the projects' future cash flows, thereby effectively comparing the projects. Information Provided On Projects The suggested project subjects for review have the following information paramount in making the best decision about which of the three projects is most viable for the entity. Major Equipment Purchase- Project A • It is anticipated that the new significant equipment purchase costs amount to $10 million. • It is expected to have its sales costs reduced by 5% every year for eight years. • The equipment is expected to be disposed of for $500,000 towards the end of the eighth year. • The anticipated rate of return remains 8 percent. • On the equipment for depreciation entail MACRS7-year schedule. 3 • Annual sales for the first year remain anticipated at $20 million and need to stay constant every year for eight years. • Before this project, the COS has been at 60 percent. • The marginal corporate rate of tax remains presumed at 25 percent. Expansion into Three additional States -Project B Project B has a projection of increasing sales and its cost of sales by 10 percent every year for five years. • The annual sales for the previous year remained at just at $20 million. • The initial cost of the project were projected at $7million, which includes an initial investment of $1 million in net working capital. At the end of the fifth year, the working capital remains recouped. • The project Bs marginal corporate tax rate is estimated to be 25%. • The project is considered as a risky investment, therefor the required rate of return is at 12%. Marketing/ Advertising Campaign Project C • The chief expected new campaign of Marketing/ advertising anticipates to cost $2 million every year lasting for six years. • It remains anticipated that the campaign will result in sales and costs of sales constantly remaining at 15 percent every year. • The previous annual sales amounted to 25 percent. • The presumed marginal corporate tax is 25 percent • As a modest risk investment, the project's requisite rate of return remains at 10 percent. Budgeting Tools 4 Capital Budgeting/ Investment Appraisal According to Senthilnathan (2020), capital budgeting, also referred to as "investment Appraisal," refers to the process of planning paramount in determining which of the entity's longterm investment add more value to the entity's owner. The capital budgeting method involves several items, including land acquisition, purchasing fixed assets such as machinery and trucks, and any other project involving a considerable outlay. It is the interest of every organization to carry out those project that increases profitability besides increasing the wealth of the shareholders. In line with the requirement of capital budgeting, every project will be assessed using its future cash flows during its lifetime. The whole idea entails determining whether the potential returns remain weighty enough concerning the key stakeholders' expectations to have the project invested. When it comes to applying capital budgeting in making an investment decision, it is appropriate to determine the project's likely profit, evaluate the involved risk, select the project, and execute it. Various successful top management applies capital budgeting techniques in determining the projects that yield the best return in a given period. For the successful completion of these tasks, the report will use different capital budgeting tools and methods paramount for the computation of NPV, IRR, PBP (Payback Period), as well as profitability Index (PI) (Michelon & et al., 2020). After analyzing the above capital budgeting tools and methods, it will be an essay providing recommendations on which of the project stands to benefit ABC Healthcare Corporation. Net Present Value 5 NPV refers to the variance between the cash inflows and outflows present values over a given period. NPV method remains a valuable capital budgeting method used in investment planning in analyzing projected projects or investments. NPV uses discounted cash flow when it comes to analysis, making it more precise than other capital budgeting methods since it takes into account risks and time variables. Using spreadsheets under Microsoft Excel, NPV for every project is computed to establish a common denominator upon which the project's comparability is undertaken. The benefit of the NPV method entails considering the time value of money in that the future dollar remains worth more than the present-day dollar. At all times, the cash flows stand discounted by another period of capital costs. The other advantage connected to NPV entails that it gives the management dollar the value it created for the firm and not a proportion of another factor. It is equally imperative to note that NPV also has some limitations that include the need for some guessing when using the company's cost of capital. In case one assumes too low a cost of capital, the outcome entails making suboptimal investments. On the other hand, costs any assumption that makes the cost of capital too high makes the management forge many suitable investments (Marchioni & Magni, 2018). Internal Rate of Return The other computation and NPV are IRR, which helps determine the potential project that adds value hence worth pursuing. Having IRR in place, there are associated advantages as well as disadvantages worth taking into consideration. One of the main advantages of IRR involves the timing of cash flows considering all periods; hence, each cash flow stands having equal weight regarding the time value of money. One of the major setbacks of the budgeting tool entails that it fails to consider the magnitude of a given project whenever projects are matched. Cash flows stand likened to the quantity of capital spending that produces cash flows. Such may be 6 problematic, especially when comparing two projects that to a great extent need a differing amount of initial outlay, though the smaller returns of the project, the higher internal rate of return (Gul & et al., 2018). Payback Period Using the payback period in computation, the focus mainly entails having faster and more profitable payback. The investment decision rule that accompanies the payback period remains simple as well as potentially informative. The method provides know-how when the cash flow of a given investment is recovered, i.e., 'paid back' using cash inflows. In computing the payback period of the projects involved, the critical factors included include the initial investments, involved cash flows, and other elements essential in calculating the project's payback period— the same as with other methods above, the payback period has pros and cons. In terms of its advantages, it is worth noting that the PBP is easy to comprehend besides having its calculation procedure quicker and more straightforward compared with other methods. Some of the disadvantages of the payback period method include not considering all cash flow generated by the projects in their entire useful life and pay no attention to the time value of money (Burgos et al. 2020). Profitability Index (PI) Profitability Index is the last computation in this setup essential in arriving at the appropriate decision. Profitability Index remains paramount in measuring the ratio between future cash flows' present value and the initial outlay. PI remains a valuable tool that mainly tends to rank investment projects besides demonstrating value generated per every unit of investment. The most attractive project is the one that has the highest PI. The main advantage of 7 using PI is that it assesses all the cash flows and demonstrates whether the investment tends to increase its value (Marchioni & Magni, 2018). Recommendation Internal Profitability Rate of Index Return Projects Net Present Value Payback Period Project A: Major Equipment Purchase $44,262,268.65 1.36 5.43 79.79% Project B: Expansion into Three additional States $20,616,672.24 1.20 3.58 86.34% Project C: Marketing or Advertising Campaign $33,470,903.72 1.23 4.84 90.36% Based on the above calculations, it's apparent that all the projects stand to benefit the corporation since they are all profitable to the company. However, some assignments tend to be more profitable hence highly regarded compared to others. From the table above, Project A has the highest Net present value amount to $44,262,268.65. Project B remains the weakest of all the projects though it also has a positive NPV. Project B's payback period is short yet losing significantly when it comes to NPV and PI concerning the other three projects. Given the setbacks associated with PBP, that tool alone cannot be considered vital in determining the best investment. Compared to NPV, PBP does not consider cash flow after the point of break-even. Project C has the highest Internal Rate of Return (IRR). However, its net cash flow present value remains less when compared to that of project A. When trying to decide between IRR and NPV, the point is that NPV is prioritized in deciding which project is more viable, 8 hence in this case, pick higher NPV over IRR. It is worth noting that the NPV method provides an outcome that forms the basis of developing an investment decision in that it presents a worth return of the invested dollar. IRR fails to make such a decision considering its percentage return fails to let the investor know how much money will be created. What is more, NPV does not suffer from perplexing assumptions since it undertakes that reinvestment occurs at the cost of capital, which remains realistic and conservative (Eagan et al., 2017). Finally, Project A should be chosen as the first prioritized to benefit the shareholders because of all the above scenarios. But if project C is selected instead, the company would still be doing well. Both project A and C have higher NPV besides having almost the same payback period for the corporation. All in all, the project that stands recommended for this report now is Project A. 9 References Burgos, J. A. M., Kittler, M., & Walsh, M. (2020). Bounded rationality, capital budgeting decisions, and small business. Qualitative Research in Accounting & Management. Eagan, B. R., Rogers, B., Serlin, R., Ruis, A. R., Arastoopour Irgens, G., & Shaffer, D. W. (2017, January). Can we rely on IRR? Testing the assumptions of inter-rater reliability. In International Conference for Computer Supported Collaborative Learning. Gul, S., Gul, H., & Haider, M. (2018). The Review and Use of Capital Budgeting Investment Techniques In Evaluating Investment Projects: Evidence From Manufacturing Companies Listed On Pakistan Stock Exchange (PSE). City University Research Journal, 8(2), 247-260. Marchioni, A., & Magni, C. A. (2018). Investment decisions and sensitivity analysis: NPVconsistency of rates of return. European Journal of Operational Research, 268(1), 361372. Michelon, P. D. S., Lunkes, R. J., & Bornia, A. C. (2020). Capital budgeting: a review of the literature. Senthilnathan, S. (2020). Capital Budgeting–The Tools for Project Evaluation. Available at SSRN 3748067. 1 Kendra Holcomb MBA-FPX 5014 Financial Condition Analysis April 16, 2021 2 Executive Summary This report evaluated the suitability of ABC Healthcare as an investment partner based on its historical financial performance. The company's overall financial position is strong based on growing earnings per share, a solid price-to-book ratio, and a stable price-to-earnings ratio. Over the three years under review, ABC earnings per share averaged 7.98 against the industry average of 1.06, while the p/b ratio stood at 0.4 against the industry average of 6.3. However, the company lags behind its closest rival, HCA, on stock market prices and earnings per share. The report recommends developing new revenue channels, repurchasing common stocks, and undertaking organizational restructuring to maximize shareholder wealth. Company Background ABC Healthcare Corporation is a company operating in the healthcare industry. The company owns urgent care centers, ambulatory surgical centers, hospitals, and outpatient clinics. Like other established firms, the company stocks are listed on the exchange allowing potential investors to buy a stake in the company. ABC wishes to review the market performance of its stocks to determine if they are valuable for investment purposes compared to prevailing market conditions. The company is also interested in understanding appropriate measures that should be undertaken to maximize shareholder value as a company's strategic objective. This information will be vital in positioning the company as an attractive investment destination for current and future investors. Overall Financial Analysis The financial strength can be measured through an objective assessment of the company's financial statements. The statements provide an overview of the accurate picture of financial transactions over a given accounting period (Frecka, 2015). A ration analysis of ABC Healthcare Corporation provides the overall financial health of the corporation that may form the basis for investment decisions. ABC market share prices have remained stable over the past three years, indicating the company's stock price predictability. A more volatile stock price is indicative of a risky stock, a scenario that is not observable with the ABC. However, the constant market price may also indicate low investment returns as investors prefer stocks with the rising market share price. A growing share price means that investors are willing to buy the stock while declining stock prices underscores a lack of investor confidence in the stock's future growth of the stock. The P/E is one of the most extensively used ratios to assess the value of a stock. The significance of the ratio stems from the fact that, on the one hand, it can be used to show if a firm's stock is undervalued or overvalued, and on the other hand, it reveals how a firm's stock value compares with the market or industry benchmark (Frecka, 2015). The 2019 financial data shows that ABC Healthcare Corporation's price/earnings ratio of 12.10. This means that investors paid $12.10 for every dollar that the company earned during the year. P/E Ratio Comparison of ABC Healthcare Corporation and HCA Healthcare Source: (HCA, 2021) 3 In comparison, its closest rival HCA Healthcare P/E ratio stood at 10.07 during 2019. By this measure, ABC performed relatively similar to its rival. A higher P/E ratio of 12.10 for ABC suggests that investors expect higher returns from the company's stock in the future (Ross et al., 2018). However, the high P/E ratio may also mean that ABC stocks are overvalued. Ultimately, investors were willing to pay more for ABC's stocks compared with HCA's stocks. Price/Earnings Ratio Market price Earnings per share ABC HCA ABC HCA ABC HCA 2019 2018 2017 2019 2018 2017 83.62 146.6 83.62 121.92 83.62 85.03 6.91 10.07 7.87 10.65 9.15 5.94 Price/ Earnings ratio 12.10 14.56 10.63 11.45 9.14 14.31 The U.S healthcare industry average had a P/E average of 27.14 for the TTM ending December 31, 2019. Based on the industry average, investors were willing to pay $27.14 for $1 earnings in the industry. In comparison, the amount is higher than what investors were willing to pay for a share in ABC Limited based on the historical data for the company and the industry averages. The same scenario replayed in the years 2018 and 2017. The industry P/E average for healthcare services in which ABC operates stood at 33.47 and 40.93, respectively, compared to ABC's 10.63 and 9.14 over the same period. The ABC's low P/E ratio indicates that the company's stocks are possibly undervalued. This market condition makes ABC's stock attractive for investment purposes (Ross et al., 2018). The overall impression is that ABC's earnings were considerably higher during the period under review than the industry averages based on the P/E ratio. Price to Book Comparison between ABC Healthcare and HCA Healthcare Price to Book Ratio Market price ABC HCA ABC HCA ABC HCA 2019 2019 2018 2018 2017 2017 121.92 83.62 85.03 83.62 146.60 Book value per share 199.1 Price to Book ratio Source: (HCA, 2021) 0.42 83.62 -1.67 209.05 -8.51 226 -14.27 -87.8 0.40 -14.3 0.37 -5.96 4 The price-to-book ratio (P/B ratio) is another ratio that can explain the company's financial health. This ratio compares a company's asset book value to its market capitalization. The 2017 data showed investors were willing to pay $0.37 for a dollar's worth of the company's book value equity. The ratio is instrumental in helping investors to understand the extent to which equity shareholders pay for the company's value of net assets (Tukdeo, 2015). The general rule of thumb is that a ratio less than 1 indicates strong investment performance. Accordingly, the overall financial health of ABC Healthcare based on the P/B ratio is solid and promising. Financial Ratio Analysis Ratio analysis is a powerful management tool that helps to enhance the understanding of a company's financial statements and the long-term trend in performance. The ratio provides key indicators of organizational ability to meet its obligations, including maximizing shareholder wealth (Tukdeo, 2015). The management of ABC Healthcare can use ratio analysis to point out weaknesses and strengths inherent in the company's financial activities. The understanding gained from the analysis is vital in informing the company's strategies to improve profitability and strategic organizational performance. Earnings per share and Its Trend Earnings per share is one of the critical financial ratios used to measure the profitability of a firm. The ratio is derived from the division of a company's net income with outstanding ordinary shares. The higher the earnings per share of a firm, the better the profitability. Earnings per share = Net income (after tax) / number of shares ABC's earnings per share stood at $6.91, 7.87, and 9.15 for 2019, 2018, and 2017. Based on this ratio, the company's performance is on a positive trajectory with a 37.5% growth between 2017 and 2019. On the other hand, the closest rivals, HCA Healthcare, posted EPS of 10.07, 10.65, and 5.94 for 2019, 2018, and 2017 respectively. By comparison, ABC's earnings per share are lower, implying that the company's profitability is weaker compared to HCA Healthcare. HCA's EPS is on an upward trajectory rising by 41% over three years under review. Comparison of earnings per share between ABC and the industry averages Industry ABC HCA Industry ABC HCA Industry average average average Earnings per share ABC HCA 2019 2019 2019 2018 2018 2018 2017 2017 2017 $0.87 6.91 10.07 1.12 7.87 10.65 1.19 9.15 5.94 5 The industry average metrics indicate that the earnings per share ratios for Healthcare Services were $0.87 for 2019, $1.12 for 2018, and $1.19 for 2017. In comparison, ABC performed above the industry average. However, HCA's strength in earnings per share is dwarfed with a much better EPS over the period under review. The Price-to-Book Ratio The Price-to-Book ratio (P/B) compares a firm's book value to its market value. While the market value is determined by the outstanding number of shares and the share price, the P/B is arrived at by dividing the market price per share by the book value per share. Comparison of P/B ratio between ABC and the industry averages Price/Book ratio Industry averages ABC HCA Industry averages ABC HCA Industry averages ABC HCA 2019 2019 2019 2018 2018 2018 2017 2017 2017 3.76 0.42 -87.8 6.28 0.40 -14.3 8.87 0.37 -5.96 The P/B ratio indicates the remaining value after a company's assets are liquidated to pay off its debts. The ratio provides a company's book value that may act as a reality check for investors keen on getting growth at reasonable stock prices (Ross et al., 2018). When evaluated along with the Return on Equity (ROE), P/B gives investors a reliable growth indicator. Although investors may consider stocks with a P/B of less than three as good enough for investment, those with a ratio below 1 are most solid and attractive. The above table shows ABC with a consistently low P/B value of less than 1. Between 2019 and 2017, the ratio ranged between 0.37 and 0.42, indicating the company's strong performance. In contrast, the industry average P/B ratio ranged between 3.76 and 8.87 over the same period. The relatively low P/B ratio for ABC may signal that the company's stocks are undervalued, an appealing prospect for investors. Price Earnings Ratio The Price-Earnings Ratio (P/E) compares the value of a stock with the industry average. In general, a high P/E may signal that investors are anticipating higher earnings growth. Conversely, a low P/E indicates the undervaluation of the company stocks. It may also suggest that the company is performing exceptionally well compared to its historical trends. Comparison of P/E ratio between ABC and the industry averages 6 Price/ Earnings ratio Industry averages ABC HCA Industry averages ABC HCA Industry averages ABC HCA 2019 2019 2019 2018 2018 2017 2017 2017 27.14 12.10 14.56 33.47 10.63 11.45 40.93 9.14 14.31 2018 Source: (HCSG, 2021) ABC healthcare recorded a P/E of 12.10 in 2019 against the industry average of 27.14. Similarly, the 2018 data indicate that the company's P/E was 10.63 against the industry average of 33.47. In 2017, the ratio was 9.14 against the industry average of 40.93. This data showed a consistently low P/E for ABC Healthcare in comparison to the industry averages. This ratio indicates that ABC's stock was generally undervalued. The P/E for the nearest rival HCA is also higher at a high of 14.56 and a low of 11.45, underscoring the undervaluation of the company's stocks. Summary of the Trend Analysis Trend analysis is a management technique used to predict the future movement of a company's stock price using historical data trends. The method is based on the idea that past data signals future activities and market behavior. The trend in ABC's earnings per share is declining from 9.15 in 2017 to 6.91 in 2019. Going by this trend, the company should anticipate the EPS to decrease unless the company takes decisive measures to tackle the decrease. The decrease reflects a similar trend in the industry average. The P/B ratio is on an upward trend beginning with 0.37 in 2017 to 0.42 in 2019. While the increase is marginal, the company should aim at maintaining or lowering the ratio. The significance of this trend is notable in the industry average that is on the downward trajectory with a high of 8.87 in 2017 and a low of 3.76 in 2019. Keeping the P/B as low as possible is vital in assuring prospective investors that the company's stocks are valuable. ABC Healthcare's P/E ratio was upward from 9.14 in 2017 to 12.10 in 2019. The 32.4% growth compares favorably with the industry declining rate of 34.5% (a drop from 40.93 in 2017 to 27.14 in 2019). On the other hand, HCA's P/E has remained relatively stable, changing by 0.25 points over the review period. Competitive Comparative Analysis Its financial ratios can measure the competitiveness of ABC Healthcare compared to the nearest rival HCA Healthcare and the industry's average performance. ABC Healthcare's 3-year moving average of earnings per share is higher than the industry average at 7.98 > 1.06. 7 However, the company lags behind its closest rival, HCA, at 8.89. ABC needs to improve its EPS to better its competition to stand a chance of attracting investors. 3-Year Moving Averages 3-Year Moving Averages Industry average ABC HCA Earnings per share 1.06 7.98 8.89 Price/ Earnings ratio 33.85 10.62 13.44 Price/Book ratio 6.30 0.40 -36.02 Market price 36.38 83.62 117.85 ABC's P/E ratio is less than both the HCA's and the industry average indicating that the stock may be undervalued. On the contrary, ABC's moving 3-year average P/B ratio is 0.4, which is much lower than the industry average. The negative HCA P/B value makes it impossible to compare with ABC (Ross et al., 2018). The 3-year average market price of ABC's stock is higher than the industry average, a good indicator for investment purposes. However, the stock's price lags behind HCA by $34.23, making it less attractive for investment purposes. Recommendations to Maximize Shareholder Wealth ABC Healthcare should grow its revenue channels that ultimately increase the company's profitability to strengthen its earnings per share. This measure is vital in helping the company compete favorably against its nearest rival, HCA Healthcare, whose EPS is higher by $0.91. ABC should repurchase some of the common stocks from shareholders to increase the book value and reduce the P/B ratio. Alternatively, the company should reduce its liabilities further to reverse the upward trend of its P/B ratio and enhance investor returns. ABC should undertake organizational restructuring and begin valuing its assets based on financial performance, such as EBIT margins of each business unit. This approach will help the company identify nonperforming units and either change growth strategies or dispose of them to avoid deadweight losses while strengthening its market prices. Conclusion ABC Healthcare is a viable partner based on the solid financial metrics discussed above. The company's P/B ratio is stable, outweighing the industry average and its closes rival HCA Healthcare. Similarly, the company's EPS is comparatively low, suggesting that the company's stocks may be undervalued. The company is likely to increase its earnings in the future to compensate for the common P/E values. 8 References Frecka, T. J. (2015). Earnings per share. Wiley Encyclopedia of Management, 1-4. HCA. (2021). Healthcare Price to Book Ratio 2006-2020 | HCA. https://www.macrotrends.net/stocks/charts/HCA/hca-healthcare/price-book HCSG. (2021). Healthcare Services PE Ratio 2006-2020. Macro Trends. https://www.macrotrends.net/stocks/charts/HCSG/healthcare-services/pe-ratio Ross, S. A., Westerfield, R. W., Jaffe, J. F., & Jordan, B. D. (2018). Corporate finance: Core principles and applications (5th ed.). New York, NY: McGraw-Hill Tukdeo, R. (2015). Analysis of financial statements. 4/18/2021 Financial Engineering to Enhance Shareholder Value Scoring Guide Financial Engineering to Enhance Shareholder Value Scoring Guide CRITERIA NON-PERFORMANCE BASIC PROFICIENT DISTINGUISHED Demonstrate an understanding of key financial tools (financial statements, ratios, industry trends, capital structure, competitive analysis) by providing an overview of the analysis used supporting recommendations made in Assessments 1 and 2. Provide a rationale for why tools were utilized. Does not demonstrate an understanding of key financial tools (financial statements, ratios, industry trends, capital structure, competitive analysis) by providing an overview of the analysis used supporting recommendations made in Assessments1 and 2. Does not provide a rationale for why tools were utilized. Demonstrates an understanding of key financial tools (financial statements, ratios, industry trends, capital structure, competitive analysis) by providing an overview of the analysis used supporting recommendations made in Assessments 1 and 2. But does not provide a rationale for why tools were utilized. Demonstrates an understanding of key financial tools (financial statements, ratios, industry trends, capital structure, competitive analysis) by providing an overview of the analysis used supporting recommendations made in Assessments 1 and 2. Provides a rationale for why tools were utilized. Demonstrates an understanding of key financial tools (financial statements, ratios, industry trends, capital structure, competitive analysis) by providing an overview of the analysis used supporting recommendations made in Assessments 1 and 2. Provides a rationale, supported by models and theories, for why such tools were utilized. Link the data used to support evidencebased recommendations, translating the recommendations to strategies focused on maximizing stakeholder value. Does not link the data used to support evidence-based recommendations and does not translate the recommendations to strategies focused on maximizing stakeholder value. Links the data used to support evidencebased recommendations, but does not translate the recommendations to strategies focused on maximizing stakeholder value. Links the data used to support evidencebased recommendations, translating the recommendations to strategies focused on maximizing stakeholder value. Links the data used to support evidence-based recommendations, translating the recommendations to strategies focused on maximizing stakeholder value and citing various financial models and theories. Translate strategies to tactical objectives to be implemented by staff, noting evidenced-based academic citations. Does not translate strategies to tactical objectives to be implemented by staff, noting evidencedbased academic citations. Translates strategies to tactical objectives to be implemented by staff, but does not not evidenced-based academic citations. Translates strategies to tactical objectives to be implemented by staff, noting evidenced-based academic citations. Translates strategies to tactical objectives to be implemented by staff, noting evidenced-based academic citations. Justifies tactics with historical examples and other qualitative information. Evaluate and recommend financial tools to be used to monitor the progress of these tactics. Does not discuss nor recommend financial tools to be used to monitor the progress of these tactics. Discusses but does not recommend financial tools to be used to monitor the progress of these tactics. Evaluates and recommends financial tools to be used to monitor the progress of these tactics. Analyzes and recommends financial tools to be used to monitor the progress of these tactics, providing a rationale for the recommendations. https://courserooma.capella.edu/bbcswebdav/institution/MBA-FPX/MBA-FPX5014/210100/Scoring_Guides/a03_scoring_guide.html 1/1 CRITERION Translate strategies to tactical objectives to be implemented by staff, noting evidenced-based academic citations. Your result: Basic Non-Performance Basic Proficient Distinguished Does not translate strategies to tactical objectives to be implemented by staff, noting evidenced-based academic citations. Translates strategies to tactical objectives to be implemented by staff, but does not not evidenced-based academic citations. Translates strategies to tactical objectives to be implemented by staff, noting evidenced-based academic citations. Translates strategies to tactical objectives to be implemented by staff, noting evidenced-based academic citations. Justifies tactics with historical examples and other qualitative information. Faculty Comments: You stated The company should reduce its liabilities. NOTE THIS DOES NOT MAKE SENSE SINCE YOU HAD NO DATA ON T THE LIABILITIES OF ABC. This is further to reverse the upward trend of its P/B ratio and enhance investor returns. WHY SHOULD ABC REMAIN UNDERVALUED? ABC should undertake organizational restructuring. WHERE IN THE DATA DID YOU FIND THIS? the company to begin valuing its assets based on financial performance. The approach will help the company identify non-performing units. To avoids deadweight losses while strengthening its market prices. HOW WILL THAT BE ACCOMPLISHED? support evidence-based recommendations and does not translate the recommendations to strategies focused on maximizing stakeholder value. evidence-based recommendations, but does not translate the recommendations to strategies focused on maximizing stakeholder value. evidence-based recommendations, translating the recommendations to strategies focused on maximizing stakeholder value. evidence-based recommendations, translating the recommendations to strategies focused on maximizing stakeholder value and citing various financial models and theories. Faculty Comments: You did pointed out: The U.S healthcare industry average had a P/E average of 27.14 for the TTM ending December 31, 2019. Based on the industry average, investors were willing to pay $27.14 for $1 earnings in the industry. The amount is higher than what investors were willing to pay for a share in ABC Limited. ABC healthcare recorded a P/E of 12.10 in 2019 against the industry average of 27.14. The 2018 data indicate that the company's P/E was 10.63 against the industry average of 33.47. In 2017, the ratio was 9.14 against the industry average of 40.93 You recommended For ABC Healthcare to increase the growth of its revenue channels, It should repurchase some of the common stocks from shareholders. ABC should also increase the book value and reduce the P/B ratio. This measure will help the company compete favorably against its nearest rival. The channels increase the company's profitability. Profitability will strengthen its earnings per share You must links the data used to support evidence-based recommendations, and translate the recommendations to strategies focused on maximizing stakeholder value. By evidence based you are supposed to support your recommendations with scholarly resources adhering to APA and within the power points.
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