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Source of Revenue: Viability –Due Monday, September 29, 2015

 

Use the balance sheet and statement of income you downloaded for Ascension Health during Week 3. In a Microsoft Excel spreadsheet, prepare a vertical analysis of the company for the years 2013 and 2014 and a horizontal analysis from 2013 (base year) to 2014 (subsequent year).

 

Discuss your findings. Here are a few, but not all, the questions you should consider.

 

  • Is Ascension Health growing?
  • What line items reflected the largest-percentage increases and/or decreases?
  • What is the financial impact these changes have on the company’s financial viability currently and in the future?
  • Prepared a vertical analysis, listing all items of data and performed necessary calculations correctly.
  • Prepared a horizontal analysis listing all items of data and performed necessary calculations correctly.
  • Drew valid conclusions about viability

 

References

 

Ascension Healthcare Alliance (2015). Consolidated Financial Statement and Supplementary Information. Retrieved from http://ascension.org/~/media/files/community_investor-relations 

 

Hospital Corporation of America (2014). Patient first; 2014 Annual Report for shareholders. Retrieved from http://investor.hcahealthcare.com/sites/hcahealthcare.investorhq.businesswire.com/files/report/file/HCA_Holdings_Inc._2014_Annual_Report.pdf

 

References to use are on the attachment.

 

Attachment is from Week 3.

 

 

 

            The key components to consider in Ascension Health’s balance sheet include the current assets, current liabilities, long-term assets, and long-term liabilities. The total current assets for the year ending 2013, is 4,781,290, whereas the total current assets for the year ending 2014 is 4,622,537. The current long term assets for the year ending 2013 is 2,834,780, whereas the long term assets for the year 2014 ended with a total of 2,938,442. The total current assets for both years are   30,047,371 and total long term assets for both years are 31,298,863. (Ascension Healthcare Alliance, 2015)

 

 

 

            The current liabilities for the company in the year 2013 are 5,353,769, whereas the current liabilities for 2014 are 5,014,449. On the other hand, the long-term liability for 2013 is 7,564,975, whereas the long term liabilities for 2014 are 7,309,277. The total liabilities for the respective years are 12,918,744 and 12,323,726. (Ascension Healthcare Alliance, 2015)

 

            The income statement for the company on the other hand, reveals that the operating revenue for 2013 is 16,536,898, whereas operating revenue for 2014 is 20,149,720. The total non-operating expenses for the two years are 16,017,377 and 19,386,269. The company experiences non-operating gains of 2,746,950 for 2013 and 1,450,614 for 2014.  (Ascension Healthcare Alliance, 2015)

 

 

 

            The balance sheet reveals that equity in earnings of affiliates increased from $29 million for 2013 to $43 million for 2014. (Ascension Healthcare Alliance, 2015)

 

The net cash flow for operating activities for 2014 is 951460 and for 2015 are 977929. The cash flow for investing activities for 2014 is 1,072,510 and respectively, 871,369 in 2015, however, they are both negative. The net flow for financing activities is 618,418 in 2014 and 688,228 in 2015 respectively. (Ascension Healthcare Alliance, 2015)

 

            Apart from these general values, it is possible to calculate financial ratios, which will help in giving better picture of the company. The most common financial ratios are liquidity ratios and the profitability ratios. The current ratio is used for determining whether there are sufficient resources in the company to clear the debt for 12 months. It is determined using the formula, current ratio=current assets/ current liabilities. From the values given, the current ratio for Ascension Health Company is 89.3% for 2013 and 92.1% in 2014. (Ascension Healthcare Alliance, 2015)

 

            The income statement for HCA Holdings, on the other hand, reveals that the revenue for the year 2013 is $34,182, whereas the revenue for 2014 is $36,918 (Hospital Corporation of America 2014). Respectively, total expenses for both years are 31,236 in 2013 and, 33,437 respectively in 2014. (Hospital Corporation of America 2014)

 

            The current liabilities for  2013 is $28831 and 31199  in 2014. The current assets for 2013 is 28,831 and the current assets for 2014 is 31199 (Hospital Corporation of America 2014). The cash flow from operating activities for 2013 is 3680 and for 2014 is 4448. The cash flow from investing activities are both negative. On the other hand, on the other hand, the cash flow from financing activities is $694 for 2013 and $1057 for 2014. (Hospital Corporation of America 2014)

 

            The balance sheet components include assets, liabilities, and long term assets, both current and non-current. Such components are subjected to some kind of analysis to get a refiner picture or by getting the ratios.

 

            HCA Holdings Company’s ratios for both 2013 and 2014 are 1%. The first difference between the two companies is the economies of scale. It is apparent from the values given that the Ascension Health Company is relatively bigger than HCA holdings. This is because its transactions are made in millions of dollars whereas, that of HCA holdings are in thousands of dollars. (HCA, 2014)

 

            The first difference concerns the gross profits and net profits. It is apparent that Ascension’s made a profit of 2,746,950 in 2013 and 2014, their profit was 1,450, whereas, HCA Holdings made a net gain of $1,556 for 2013 and $1,875 in 2014 respectively. The second difference is that the two companies differ in their current ratios. The current ratio for Ascension Health is 89.3% for 2013 and 92.1% for 2014. However, on the other hand, the current ratio for HCA Holdings is 1% for both 2013 and 2014. (HCA, 2014)

 

            The third difference is that the two companies have difference in cash flows. For example, the cash flow from operating activities for HCA Holdings in 2013 is 3680 and for 2014 is 4448. On the other hand, the net cash flow for operating activities for Ascension for HCA Holdings 2014 is 951460 and for 2015 is 977929. The fourth differences are that the equity in earnings of affiliates for Ascension increased from $29 million for 2013 to $43 million for 2014. This is far much higher than that of HCA Holdings Company. The fifth difference is that the two companies have difference in the cash flow from financing activities. The one for HCA Holdings is 694 for 2013 and 1057 for 2014, whereas that of Ascension is 618,418 and 688,228 for 2014 and 2015 respectively. (HCA, 2014)

 

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