1:10 v GEL X HSA 403 Quant Reasoning Assignm... ... H.S.A. 403-Ratio Analysis Acme Health Care System is considering the acquisition of the Beechtree Nursing Home to strengthen its vertically integrated health care system, and its strategic plan to grow. It will be using Financial Ratios to summarize strengths and weaknesses of the facility and its management team. This analysis will help the facility make its decision to acquire Beechtree or not. If it does acquire Beechtree, this analysis will help with other decision that it must make soon after the acquisition Financial Ratios are a way to summarize management capabilities (Chapter 4 And Appendix - Financial Analysis using Ratio) and decision making skill. An Analysis that uses the Income Statement (short term thinking) and Balance Sheet (long term thinking) can help identify not only the strengths and weaknesses of the organization, but the strengths and weaknesses of management's decision making Remember, every management decision, either directly or indirectly has an impact on the organization's financial statement Objective: The students will use Financial Ratios to analyze a potential strategic acquisition. 2. The student will use the Financial Ratios to evaluate the current management team's ablity to make good long term and short term decisions. Should Acme continue to employ the current management team. If Beechtree is acquired, do we keep its management team or do build a new one Net Operating Income for this financial statement-Decrease in unrestricted net assets + Interest Expense + Depreciation Remember the standard is a comparison point. It is sometimes better when the facility is lower than the standard. For example, Days in Net Receivable is a ratio that looks at how long it takes to collect payment after the bill invoice has been sent. It is always better to get paid sooner than later. In contrast, Days Cash on Hand is a ratio where being above standard is better. Think of this ratio in the following manner. If an organization billing system blows up and we cannot billele mem m ing in)-how many 1:10 v GEL X HSA 403 Quant Reasoning Assignm... ... H.S.A. 403-Ratio Analysis Acme Health Care System is considering the acquisition of the Beechtree Nursing Home to strengthen its vertically integrated health care system, and its strategic plan to grow. It will be using Financial Ratios to summarize strengths and weaknesses of the facility and its management team. This analysis will help the facility make its decision to acquire Beechtree or not. If it does acquire Beechtree, this analysis will help with other decision that it must make soon after the acquisition Financial Ratios are a way to summarize management capabilities (Chapter 4 And Appendix - Financial Analysis using Ratio) and decision making skill. An Analysis that uses the Income Statement (short term thinking) and Balance Sheet (long term thinking) can help identify not only the strengths and weaknesses of the organization, but the strengths and weaknesses of management's decision making Remember, every management decision, either directly or indirectly has an impact on the organization's financial statement Objective: The students will use Financial Ratios to analyze a potential strategic acquisition. 2. The student will use the Financial Ratios to evaluate the current management team's ablity to make good long term and short term decisions. Should Acme continue to employ the current management team. If Beechtree is acquired, do we keep its management team or do build a new one Net Operating Income for this financial statement-Decrease in unrestricted net assets + Interest Expense + Depreciation Remember the standard is a comparison point. It is sometimes better when the facility is lower than the standard. For example, Days in Net Receivable is a ratio that looks at how long it takes to collect payment after the bill invoice has been sent. It is always better to get paid sooner than later. In contrast, Days Cash on Hand is a ratio where being above standard is better. Think of this ratio in the following manner. If an organization billing system blows up and we cannot billele mem m ing in)-how many
