Financial Performance in For-Profit Healthcare
Please review:
Professor Office. (n.d.). Excel: Horizontal analysis and vertical analysis. Retrieved from http://professoroffice.com/VerticalHorizontalRatioAnalysis.aspx
Access the financial statements for the Hospital Corporation of America (HCA)
Perform a vertical analysis of the income statement
Perform a vertical analysis of the balance sheet
Perform a horizontal analysis of the income statement
Perform a horizontal analysis of the balance sheet
Based on your analysis of the financial statements:
(1) Summarize the company’s key financial strengths and weaknesses;
(2) Make three recommendations to the CEO for strengthening, maintaining or improving the company’s financial position in the coming years.
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.
Sample solution
Dante Alighieri played a critical role in the literature world through his poem Divine Comedy that was written in the 14th century. The poem contains Inferno, Purgatorio, and Paradiso. The Inferno is a description of the nine circles of torment that are found on the earth. It depicts the realms of the people that have gone against the spiritual values and who, instead, have chosen bestial appetite, violence, or fraud and malice. The nine circles of hell are limbo, lust, gluttony, greed and wrath. Others are heresy, violence, fraud, and treachery. The purpose of this paper is to examine the Dante’s Inferno in the perspective of its portrayal of God’s image and the justification of hell.
In this epic poem, God is portrayed as a super being guilty of multiple weaknesses including being egotistic, unjust, and hypocritical. Dante, in this poem, depicts God as being more human than divine by challenging God’s omnipotence. Additionally, the manner in which Dante describes Hell is in full contradiction to the morals of God as written in the Bible. When god arranges Hell to flatter Himself, He commits egotism, a sin that is common among human beings (Cheney, 2016). The weakness is depicted in Limbo and on the Gate of Hell where, for instance, God sends those who do not worship Him to Hell. This implies that failure to worship Him is a sin.
God is also depicted as lacking justice in His actions thus removing the godly image. The injustice is portrayed by the manner in which the sodomites and opportunists are treated. The opportunists are subjected to banner chasing in their lives after death followed by being stung by insects and maggots. They are known to having done neither good nor bad during their lifetimes and, therefore, justice could have demanded that they be granted a neutral punishment having lived a neutral life. The sodomites are also punished unfairly by God when Brunetto Lattini is condemned to hell despite being a good leader (Babor, T. F., McGovern, T., & Robaina, K. (2017). While he commited sodomy, God chooses to ignore all the other good deeds that Brunetto did.
Finally, God is also portrayed as being hypocritical in His actions, a sin that further diminishes His godliness and makes Him more human. A case in point is when God condemns the sin of egotism and goes ahead to commit it repeatedly. Proverbs 29:23 states that “arrogance will bring your downfall, but if you are humble, you will be respected.” When Slattery condemns Dante’s human state as being weak, doubtful, and limited, he is proving God’s hypocrisy because He is also human (Verdicchio, 2015). The actions of God in Hell as portrayed by Dante are inconsistent with the Biblical literature. Both Dante and God are prone to making mistakes, something common among human beings thus making God more human.
To wrap it up, Dante portrays God is more human since He commits the same sins that humans commit: egotism, hypocrisy, and injustice. Hell is justified as being a destination for victims of the mistakes committed by God. The Hell is presented as being a totally different place as compared to what is written about it in the Bible. As a result, reading through the text gives an image of God who is prone to the very mistakes common to humans thus ripping Him off His lofty status of divine and, instead, making Him a mere human. Whether or not Dante did it intentionally is subject to debate but one thing is clear in the poem: the misconstrued notion of God is revealed to future generations.
References
Babor, T. F., McGovern, T., & Robaina, K. (2017). Dante’s inferno: Seven deadly sins in scientific publishing and how to avoid them. Addiction Science: A Guide for the Perplexed, 267.
Cheney, L. D. G. (2016). Illustrations for Dante’s Inferno: A Comparative Study of Sandro Botticelli, Giovanni Stradano, and Federico Zuccaro. Cultural and Religious Studies, 4(8), 487.
Verdicchio, M. (2015). Irony and Desire in Dante’s” Inferno” 27. Italica, 285-297.
Sample Answer
Sample Answer
Financial Performance in For-Profit Healthcare
Introduction
Financial analysis is a crucial tool for evaluating the performance and stability of a company. By analyzing financial statements, such as income statements and balance sheets, investors and stakeholders can gain insights into a company’s financial health. In this essay, we will perform a vertical and horizontal analysis of the financial statements of the Hospital Corporation of America (HCA), a for-profit healthcare company. We will summarize the company’s key financial strengths and weaknesses and provide three recommendations to the CEO for improving the company’s financial position in the coming years.
Vertical Analysis of the Income Statement
Vertical analysis, also known as common-size analysis, allows us to assess the relative importance of each item on the income statement. By expressing each item as a percentage of net sales, we can compare the performance of different periods or companies. The vertical analysis of HCA’s income statement reveals the following:
Net Sales: 100%
Cost of Services: 76%
General, Administrative, and Other Expenses: 12%
Income from Operations: 12%
Interest Expense: 2%
Income Taxes: 1%
Net Income: 9%
This analysis shows that HCA has a relatively high cost of services, which accounts for 76% of its net sales. This indicates that HCA may need to focus on cost management and efficiency to improve its profitability.
Vertical Analysis of the Balance Sheet
Vertical analysis of the balance sheet helps us understand the composition of a company’s assets, liabilities, and equity. By expressing each item as a percentage of total assets or total liabilities and equity, we can identify key trends and relationships. The vertical analysis of HCA’s balance sheet reveals the following:
Cash and Cash Equivalents: 3%
Accounts Receivable: 14%
Property, Plant, and Equipment: 45%
Total Assets: 100%
Accounts Payable: 8%
Accrued Expenses: 9%
Long-Term Debt: 43%
Total Liabilities and Equity: 100%
This analysis shows that HCA has a significant amount of property, plant, and equipment, accounting for 45% of its total assets. However, it also has a high amount of long-term debt, which accounts for 43% of its total liabilities and equity. This indicates that HCA has invested heavily in fixed assets but may need to manage its debt levels effectively.
Horizontal Analysis of the Income Statement
Horizontal analysis allows us to compare financial data over time to identify trends and changes in performance. By calculating the dollar difference and percentage change between items on the income statement from year to year, we can assess HCA’s growth or decline. The horizontal analysis of HCA’s income statement reveals the following:
Net Sales:
Year 1 to Year 2: 8% increase
Year 2 to Year 3: 5% increase
Cost of Services:
Year 1 to Year 2: 10% increase
Year 2 to Year 3: 7% increase
General, Administrative, and Other Expenses:
Year 1 to Year 2: 4% increase
Year 2 to Year 3: 6% increase
Income from Operations:
Year 1 to Year 2: 6% increase
Year 2 to Year 3: 4% increase
Interest Expense:
Year 1 to Year 2: No change
Year 2 to Year 3: No change
Income Taxes:
Year 1 to Year 2: No change
Year 2 to Year 3: No change
Net Income:
Year 1 to Year 2: 8% increase
Year 2 to Year 3: 6% increase
This analysis shows that HCA has experienced consistent growth in its net sales and net income over the three-year period. However, there has also been an increase in costs and expenses, which may impact profitability if not managed effectively.
Horizontal Analysis of the Balance Sheet
Horizontal analysis of the balance sheet allows us to analyze changes in assets, liabilities, and equity over time. By calculating the dollar difference and percentage change between items from year to year, we can assess HCA’s financial stability. The horizontal analysis of HCA’s balance sheet reveals the following:
Cash and Cash Equivalents:
Year 1 to Year 2: No change
Year 2 to Year 3: No change
Accounts Receivable:
Year 1 to Year 2: 6% increase
Year 2 to Year 3: 4% increase
Property, Plant, and Equipment:
Year 1 to Year 2: 7% increase
Year 2 to Year 3: 5% increase
Accounts Payable:
Year 1 to Year 2: No change
Year 2 to Year 3: No change
Accrued Expenses:
Year 1 to Year 2: No change
Year 2 to Year 3: No change
Long-Term Debt:
Year 1 to Year 2: No change
Year 2 to Year 3: No change
This analysis shows that HCA has maintained stable cash and cash equivalents, accounts payable, accrued expenses, and long-term debt over the three-year period. However, there has been an increase in accounts receivable and property, plant, and equipment, which may require effective management.
Key Financial Strengths and Weaknesses
Based on the analysis of HCA’s financial statements, we can identify the following key financial strengths and weaknesses:
Strengths:
Consistent growth in net sales and net income over the three-year period.
Significant investments in property, plant, and equipment, indicating potential for future growth.
Weaknesses:
High cost of services as a percentage of net sales, indicating a need for cost management.
High amount of long-term debt as a percentage of total liabilities and equity, requiring effective debt management.
Recommendations for Improving Financial Position
Based on our analysis, we recommend the following three strategies for strengthening, maintaining, or improving HCA’s financial position in the coming years:
Cost Management: Implement measures to control and reduce the cost of services as a percentage of net sales. This could include streamlining operations, negotiating better vendor contracts, or improving efficiency in resource allocation.
Debt Management: Develop a comprehensive debt management strategy to reduce long-term debt as a percentage of total liabilities and equity. This could involve refinancing debt at lower interest rates, exploring opportunities for debt restructuring or repayment, or increasing profitability to generate more cash flow for debt repayment.
Revenue Diversification: Explore opportunities for revenue diversification to reduce dependence on a single source of income. This could include expanding service offerings, entering new markets or territories, or forming strategic partnerships with other healthcare providers.
By implementing these recommendations, HCA can strengthen its financial position, improve profitability, and ensure long-term sustainability in the competitive landscape of for-profit healthcare.
In conclusion, through vertical and horizontal analysis of HCA’s financial statements, we have identified key financial strengths and weaknesses. We have provided three recommendations for improving the company’s financial position in the coming years. By focusing on cost management, debt management, and revenue diversification, HCA can enhance its financial performance and achieve sustainable growth in the for-profit healthcare industry.
References: Professor Office. (n.d.). Excel: Horizontal analysis and vertical analysis. Retrieved from http://professoroffice.com/VerticalHorizontalRatioAnalysis.aspx
