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ABC Healthcare Corporation

Student

Instructor

Institution

Due Date
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Executive Summary

Hospitals, ambulatory surgery facilities, urgent care facilities, as well as outpatient clinics

are all owned by ABC Healthcare Corporation. Maria Gomez, the company's creator, and the

president serve as its leader. The financial department views hospitals, ambulatory surgery centers,

urgent care facilities, and outpatient facilities as independent entities with separate financial

statements that must be integrated during the compilation of consolidated accounts. The sole source

of revenue for the corporation across all business divisions is the public delivery of associated

medical services.

According to the ratio study carried out over the previous three years, the ABC Healthcare

Corporation market value per share has remained constant while earnings per share have steadily

declined. Over the previous three years, the price-to-earnings ratio has risen steadily. Its pattern

from the ratio study demonstrates that the market's shareholders are satisfied with the company's

performance and are ready to pay as much to possess more shares in the company. The price-to-

earnings ratio is the major indicator of this.

Company Background.

Hospitals, ambulatory surgery facilities, urgent care facilities, as well as outpatient centers

are all owned by ABC Healthcare Corporation. Maria Gomez, the company's president and chief

executive, is in charge. According to the accounting records for the year that finished in December

2019, the company has been in business for the last five years with capital reserves of $2500000.

Being a publicly traded company, ABC Healthcare Corporation's shares are listed and available for

investing in the stock market exchange (Nicolescu et al., 2020). Up to 20 percent of the firm's 2000

employees were casual workers, making up most of the workforce. According to the company's top

management's achievements over the last five years, the business's activities and profits have

improved. The stockholders' wealth has likewise been steadily rising.

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Overall Financial Analysis

A thorough evaluation of the prospective investor's financial situation is necessary for

successful investing. The purpose of financial evaluation is to give users the financial data they

need to make decisions (Palepu et al., 2020). The financial position of the firm that a shareholder is

concerned in is determined through the application of financial measures in such a financial

statement audit. Profitability, solvency, liquidity, and efficiency ratios are the different categories

under which these financial ratios fall. There is much disagreement over the goals of financial

statements. A thorough evaluation of a company's productivity can be obtained using additional

assessment methods, such as balanced scorecards.

According to the ratio analysis conducted across the previous three years, the firm's market

value per share has remained constant while earnings per share have steadily declined. Over the

previous three years, the book value per share has increased exponentially. Since 2017, the

company's performance has remained stable at $83.62 on the stock market without notable changes.

Financial Ratio Analysis

For the previous three years, the company's market rate has remained consistent at $83.62. it

indicates that investors have maintained their current perspective on the share's marketability. A

commodity's price will rise when demand is high, availability is low, and supply will fall when

supply exceeds demand, according to the laws of supply and demand (Otero 2022). The corporation

is deemed to operate at equilibrium if its share price remains constant. Investors may find a

justification to spend the same quantity to buy an additional share since the company has been able

to integrate raising its net worth with floating shares in the market. Nevertheless, despite the

declining value per share, inflation is another aspect that can contribute to the trend. The amount of

$83.62 paid today and tomorrow are not the same.

Over the previous three years, the company's performance to book ratio has continuously

increased. By dividing the share's market price by its par value, the value to book ratio is
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determined. The price where a share is traded on the stock exchange is known as its market price,

but its par value is the amount it is documented in a financial statement. Since the market price

considers other market factors, it is typically anticipated that the market price will be greater than

the par value. The book value per share has been rising for the previous three years. The company's

net wealth and shareholders have changed, which has led to something like this. The book-to-value

per share is determined by dividing the company's net assets by the total number of outstanding

shares. According to the rising book value per share, the firm's net assets have all been growing

more rapidly than the shareholding. It is a strong signal that the business may increase revenue

without necessarily relying on its shareholders' capital to invest in much more properties. Over the

course of the past three years, the price on the market has remained same at $83.62. Over the course

of three years, the P/E ratio saw significant swings, settling at an average of 10.62, while the P/E

average for the healthcare industry was 24.90. Over the course of the past three years, there has

been a $2.24 decline in earnings per share. The book value of each share has experienced a $26.90

decline. In 2019, the price to book ratio was 37, while in 2020 and 2021 it was 40 and in 2021 it

was 42. The overall state of ABC Healthcare's finances is sound, and the company's performance is

consistent with that of its peers in the industry.

The tangible net worth of HCA Healthcare is negative, which indicates that the company's

net liabilities are greater than their assets. This may have a detrimental effect on future financing

opportunities and may restrain the expansion of future businesses. This does not necessarily imply

that it is not a good investment at the present time; but, this does not rule out the possibility that it

will be in the future. A price-to-earnings ratio of 12.10 for ABC in 2021 indicates that investors

anticipate an increase in the stock's return in the years to come. It is important to point out that the

higher P/E ratio for ABC could indicate that their stocks are overvalued; this is something that

needs to be taken into consideration. People are willing to pay a higher price for ABC's stocks than

they are for HCA's stocks in the end.

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Trend Analysis

According to the rising book value per share pattern, the firm's net assets have increased

faster than shareholding. Without relying on shareholders' funds, the administration has increased

revenue to invest in more properties. Over the previous three years, the company's share price to

book ratio has continuously increased. As the market price considers other market dynamics, it is

typically anticipated that the market price will be greater than the par value (Black & Scholes

2019). Investors may find a rationale to spend the same amount to purchase an additional share

since the company has managed to balance raising its share float with growing its net value.

Competitive Comparative Analysis

Keep the share's market price steady. A rising book value per share shows that the business

is doing well, so investors are confident in putting their money to work here. Over the previous

three years, the total revenue has steadily increased.

Recommendations

An increase in the company's net income will result in an increase in the company's value.

ABC Healthcare has to do a cost-benefit analysis to determine how they should adjust their pricing

structure for their clients and patients, then implement those adjustments to improve their bottom

line. As a consequence, this will lead to a rise in earnings per share, which will in turn improve the

value of the firm to its shareholders. For the purpose of increasing profits per share, ABC

Healthcare could think about purchasing some of its own shares on the open market and retiring

others. When there are fewer shares outstanding, the value of the company on each individual share

rises, which ultimately results in an increase in the stock's value. It is necessary for ABC Healthcare

to consider expanding their business by, for example, acquiring a new hospital building or an urgent

care center. This will help produce revenue, which will in turn raise profits and equity for

shareholder value, which will in turn boost earnings per share.

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Conclusion

Hospitals, outpatient facilities, emergency care facilities, as well as ambulatory surgery

centers are all owned by ABC Healthcare Corporation. Maria Gomez, the company's president and

chief executive, is in charge. According to the ratio study carried out over the previous three years,

the company's market value per share largely remained constant while earnings per share have

steadily declined. Over the previous three years, the book value per share has increased

exponentially. Since 2017, the company's share price has remained stable at $83.62 on the stock

exchange without notable changes. This suggests that business is booming.

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References

Nicolescu, L., Tudorache, F. G., & Androniceanu, A. (2020). Performance risk analysis on mutual

funds versus stock exchanges in young financial markets. Journal of International Studies,

13(1).

https://www.jois.eu/files/18_915_Nicolescu%20et%20al.pdf

Palepu, K. G., Healy, P. M., Wright, S., Bradbury, M., & Coulton, J. (2020). Business analysis and

valuation: Using financial statements. Cengage AU.

https://books.google.co.ke/books?

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&sig=DK7s574-MeGHVSxhi9sY_gQLxkA&redir_esc=y#v=onepage&q=The%20purpose%20of

%20the%20financial%20evaluation%20is%20to%20give%20users%20with%20the%20financial

%20data%20they%20need%20to%20make%20decisions.&f=false

Otero, S. (2022). The law of supply and demand rules monolignol transport.

https://academic.oup.com/plcell/article/34/5/1888/6529402

Black, F., & Scholes, M. (2019). The pricing of options and corporate liabilities. In World Scientific

Reference on Contingent Claims Analysis in Corporate Finance: Volume 1: Foundations of

CCA and Equity Valuation (pp. 3-21).

https://www.worldscientific.com/doi/abs/10.1142/9789814759588_0001