Financial Analysis for Multihospital Systems

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timer Asked: Jun 19th, 2015

Question Description

For this assignment, make sure you post your initial response to the Discussion Area by Saturday, June 20, 2015. (EST)

To support your work, use your course and textbook readings and also use the South University Online Library. As in all assignments, cite your sources in your work and provide references for the citations in APA format.

Start reviewing and responding to the postings of your classmates as early in the week as possible. Respond to at least two of your classmates' initial postings. Participate in the discussion by asking a question, providing a statement of clarification, providing a point of view with a rationale, challenging an aspect of the discussion, or indicating a relationship between two or more lines of reasoning in the discussion. Cite sources in your responses to other classmates. Complete your participation for this assignment by Wednesday, June 24, 2015.

Financial Analysis

Write your initial response in 1–2 paragraphs in approximately 300 words.

  • For multihospital systems, scenario analysis has both advantages and disadvantages. Which do you think are the greater?
  • Why should or shouldn't financial analysis play a dominant role in capital budgeting decisions?

Provide reasons for and evidence in support of your responses.

Comment on the postings of two of your classmates.

Be sure to cite any relevant resources used in framing your responses. Apply APA standards to cite sources.

Presents the grading criteria and rubric for this assignment.

Financial Analysis.docx 


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Class: Financial Management of Healthcare Organizations Text-book: Healthcare Finance: An Introduction to Accounting and Financial Management This week's readings: • • • The Basics of Capital Budgeting Project Risk analysis Current Asset Management and Financing Assignment 1: Discussion Assignment For this assignment, make sure you post your initial response to the Discussion Area by Saturday, June 20, 2015. To support your work, use your course and textbook readings and also use the South University Online Library. As in all assignments, cite your sources in your work and provide references for the citations in APA format. Start reviewing and responding to the postings of your classmates as early in the week as possible. Respond to at least two of your classmates' initial postings. Participate in the discussion by asking a question, providing a statement of clarification, providing a point of view with a rationale, challenging an aspect of the discussion, or indicating a relationship between two or more lines of reasoning in the discussion. Cite sources in your responses to other classmates. Complete your participation for this assignment by Wednesday, June 24, 2015. Financial Analysis Write your initial response in 1–2 paragraphs in approximately 300 words. • For multihospital systems, scenario analysis has both advantages and disadvantages. Which do you think are the greater? • Why should or shouldn't financial analysis play a dominant role in capital budgeting decisions? Provide reasons for and evidence in support of your responses. Comment on the postings of two of your classmates. Be sure to cite any relevant resources used in framing your responses. Apply APA standards to cite sources. © 2015 South University Objectives Unacceptable 0 Points Satisfactory (C Range) 28 to 31 Points No initial posting to evaluate. The information provided is inaccurate, not focused on the assignment’s topic, and/or does not answer the question(s) fully. Response demonstrates incomplete understanding of the topic and/or inadequate preparation. The information provided is accurate, giving a basic understanding of the topic(s) covered. A basic understanding is when you are able to describe the terms and concepts covered. Despite this basic understanding, initial posting may not include complete development of all aspects of the assignment. 0 Points 1 to 13 Points No responses to other classmates in this discussion forum. Above Average (B Range) 32 to 35 Points Exemplary (A Range) 36 to 40 Points Score _ out of 40 The information provided is accurate, providing an indepth, well thought-out understanding of the topic(s) covered. An in-depth understanding provides an analysis of the information, synthesizing what is learned from the course/assigned readings. 14 to 15 Points The information provided is accurate, displaying a good understanding of the topic(s) covered. A good understanding is when you are able to explain the terms and topics covered. Initial posting demonstrates sincere reflection and addresses most aspects of the assignment, although all concepts may not be fully developed. 16 to 17 Points 18 to 20 Points _ out of 20 May include one or more of the following: *Comments to only one other student's post. *Comments are not substantive, such as just one line or saying, “Good job,” or “I agree.” *Comments are off topic. Comments to two or more classmates’ initial posts but only on one day of the week. Comments are substantive, meaning you reflect and expand on what the other students wrote. Comments to two or more classmates’ initial posts on more than one day. Comments are substantive, meaning they reflect and expand on what the other students wrote. 0 Points 1 to 13 Points 14 to 15 Points 16 to 17 Points Comments to two or more classmates’ initial posts and to the instructor's comment (if applicable) on more than two days. Responses demonstrate an analysis of peers’ comments, building on previous posts. Comments extend and deepen meaningful conversation and may include a follow-up question. 18 to 20 Points _ out of 20 No postings for which to evaluate language and grammar. Numerous issues in any of the following: grammar, mechanics, spelling, use of slang, and incomplete or missing APA citations and references. If required for the assignment, did not use course, text, and/or outside readings (where relevant) to support work. Some spelling, grammatical, and/or structural errors. Some errors in APA formatting (citations and references). If required for the assignment, utilizes sources to support work for initial post but not comments to other students. Sources include course/text readings but outside sources (when relevant) include nonacademic/authoritative, such as Wikis and .com resources. Minor errors in grammar, mechanics, or spelling in the initial posting. Minor errors in APA formatting (citations and references). If required for the assignment, utilizes sources to support work for both the initial post and some of the comments to other students. Sources include course and text readings as well as outside sources (when relevant) that are academic and authoritative (e.g., journal articles, other text books, .gov websites, professional organization websites). Comments: Quality of Initial Posting Participation in Discussion Emerging (F through D Range) 1 to 27 Points Writing Mechanics (Spelling, Grammar, APA) and Information Literacy Total Score: Quality of Initial Posting Minor to no errors in grammar, mechanics, or spelling in both the initial post and comments to others. APA formatting is correct. If required for the assignment, utilizes sources to support work for both the initial post and the comments to other students. Sources include course and text readings as well as outside sources (when relevant) that are academic and authoritative (e.g., journal articles, other text books, .gov websites, professional organization websites). 40 © 2015 South University Participation in Discussion Writing Mechanics (Spelling, Grammar, and APA) and Information Literacy Total 20 20 80 © 2015 South University There is an understanding that as a CFO one must be able to know and use a Capital asset pricing model. In is one of the most important tools in calculating the return to be taken from a certain investment that the organization may take. It is a better way given that every investment must be calculated against or on the basis of the risk on losses. The use of the capital asset pricing employs the risk multiplier in the calculations in order to measure the risks appropriately. Such multiplier is what is known as the beta coefficient. However, despite it being one of the most used and appropriate way to measure the risk, CAPM uses assumptions. There are also weaknesses that accompany the capital asset pricing model. These are the disadvantages and limitations that are noted in the technique in calculating the return on investment. The very first is that it is built on assumptions that provide unrealistic real world picture. The assumption is unattainable though the models require its usage (Ogilvie and Chartered Institute of Management Accountants. 2009). There is no way that an investor can be able to borrow at the rate in which a government borrows thus meaning that the return might be lower than the one provided by the calculation. The other weakness is that the firm that decides to use the tool in assessing the investment will be required to use the beta reflective for such investment. However, it becomes more inefficient and unreliable outcomes might be experienced when such assessment is used given that determination of project the project is somewhat impossible. Therefore it might affect the reliability of the results given through the capital asset pricing model in the firm. The other disadvantage is that the use of risk free rate as provided by the short-term government securities and used in this model may make the input unstable. The risk free rate is likely to change over a day making it more and more unreliable for the use in getting the return on investment. Government securities changes in yield on a daily bases as per securities and exchange market and you cannot be able to define an exact exchange rate meaning that whatever the results there might be lower or higher than the actual value. The other disadvantage is that the model uses the long-term market return to ensure that there is stable or smooth return. This is because it is possible that there are times when the market return which is determined by capital gains and divides can be negative. In such cases, there can also be misrepresentation of the future returns in the market since the returns will consist of a negative factor. Use of security market line as a representation in the model is a better way of determining the expected return for risk for the items or the assets that are being used for the investment. The best option between debt and equity financing is a better way for a startup given that there are no obligations for repaying the equity investors. There are no hustles brought by interest rates and the business is not likely to make losses when proper information has been given to investors (Vernimmen, Quiry, Dallocchio, Le and Salvi, 2014). With the availability of good investors, the best option would only be on equity financing rather than using the debt financing. References Ogilvie, J., & Chartered Institute of Management Accountants. (2009). F3: Financial strategy. CIMA/Elsevier. Vernimmen, P., Quiry, P., Dallocchio, M., Le, F. Y., & Salvi, A. (2014). Corporate finance: practice. Oxford: Theory and © 2015 South University
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