Assignment 3: Course Project Task 1—Understanding Prospective Client Organizations

For this assignment, you will refer to the financial information you collected for the FP and NFP in M1: Assignment 2. You will also refer to the information on the fictional facility, Sakasegawa Memorial Hospital (SMH), for which financial data is supplied.

You will use ratio analysis to conduct a review of each organization’s financial information. You will carry out an analysis of the key components of the balance sheet and income statement. Then, you will address the differences in the accounting statements of NFPs and FPs, including an examination of operational issues.

Here are some questions you can use to direct your review:

• Which organization is bigger? Consider assets, liabilities, and equity.
• Which organization has more debt? Consider debt and risk.
• Which organization is making money? Consider patient care revenue, patient days, and hospital beds.
• How much money comes from sources other than patient revenue? Consider contributions and research.
• How does the structure differ between FP and NFP facilities? Consider organizational type and overall structure.

Write a 3 to 5 page paper in Microsoft Word format. All written assignments and responses should follow APA rules for attributing sources. Use the following file naming convention: LastnameFirstInitial_M1_A3.doc.
By Friday, March 8, 2013, submit your assignment to the M1: Assignment 3 Dropbox.

Voluntary Discussion

As you work on your course project, you may want to discuss your work with your classmates. The Discussion Area below will be available throughout the week where you can share your thoughts about your project, seek your classmates’ views on it, and offer feedback on their work. This activity is optional and not graded.

Assignment 3 Grading Criteria	Maximum Points
Summarized differences between the NFP, FP, and SMH financial data.	12
Summarized differences between NFP, FP, and SMH organization operations.	12
Supported assertions with reasons, examples, and references to reliable sources.	12
Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources, displayed accurate spelling, grammar, and punctuation.	4
Total:	40

 

For assistance with any problems you may have when completing this

 

 

 

In your own words, define probability.

 

 There are 2 types of probability: empirical and theoretical (classical).

       Define the 2 probability types in your own words.

• List 1 profession example for each probability type: empirical probability and theoretical (classical) probability. Explain clearly how these probabilities are used.

 List a real world probability problem for your peers to solve. Your peers will have the opportunity to work your problem and receive feedback from you as the discussion progresses. Be sure to go back and respond to those who solved your problem or who need help with solving it

Simmons Japan Limited As mentioned in class, the ANPV method is best suited for valuation of this sort of situation (leveraged buyout LBO) where capital structure changes over time. The buyer initially borrows a lot and plans to pay back later, as shown in Exhibit 6. The valuation process is nothing but an application of the ANPV we covered in class. First, you should identify FCF that can be discounted by unlevered cost of equity. You may have to make some assumptions about working capital. Second, identify financial side effects arising from amortization and various debts. 9 1. Is SJL worth the $29 million asking price? What value would you assign to the company? Assume U.S. equity premium is 6 8%. Pay attention to what discount rates to use for cash flows and different tax shields. 2. Does PruAsia’s target dollar returns (that is, IRR) of 20 25% appear achievable for this deal under the proposed terms? What must be done over the next 5 to 10 years to realize these returns? Is it realistic? (Hint: In answering this question, consider PruAsia’s exit strategy. PruAsia is investing in both subordinated debt and equity of SJL. The sub debt offers only 9.5%, which is not enough to attain 20 25% return So PruAsia would have to sell equity to someone in 5 to 10 years at a high enough price to achieve IRR of 20 25%. The question is: how much do they have to sell the equity for?) 3. To whom would you try to sell the subordinated debt for this deal? What are likely to be their concerns and reservations with regard to this debt? 4. Would you accede to Wesray’s request for a five year option for 10% of SJL’s equity? Why or why not?

Use Solver to set up and solve problem No. 32, page 125 of your textbook. Make sure to embed your formulation to the Linear Programming problem within your Excel solution. This problem is a classic transportation problem application where locations 1 and 2 serve as the “supply nodes”, and locations 3, 4, 5 and 6 serve as the “demand nodes”. In addition to the typical supply and demand constraints that you need to include, make sure to also account for the constraints which will ensure that locations 3, 4, 5, and 6 each receive at least 5 cars.

(54x^ 6/6x^2)^ 3