Cox Case

Richard Veller, the new CFO for Union Medical Center, began to change the operations of their management. Richard Veller looked to change UMC to an industrial system, which meant that the hospital would view cases as products. Just like any ordinary business, these products would have cost objects and would require an accounting system. In order to allocate costs appropriately, UMC was required to organize their cases into Diagnosis Related Groups to create a functional management control system. These changes brought certain internal issues into the spotlight. If solutions are not found, the hospital will not be able to implement their plans.

Middleboro Community Hospital is a non-profit hospital founded in 1890 with state licensure, The Joint Commission accreditation, and American College of Surgeons approval. Over 120+ year history, Middleboro has grown to be a respectable facility in the eyes of the medical community as well as its immediate population of patients in Middleboro. Still, Middleboro must continue to fight to remain relevant and up-to-date with the latest medical technology and changing patient demographics and needs. In order to this, Middleboro Community Hospital has set these three goals as part of their corporate strategy:

For instance, Book values might be realistic in mark-to-market accounting situations, where the firm has just started up, or where the firm consists substantially of working capital. On the other hand, Liquidation estimates would be more realistic in cases where the firm will indeed liquidate. Replacement values might indicate market values where the firm experiences high inflation. In any comparison to this, DCF and multiples give very direct estimates of market values. DCF will dominate where the firm has no earnings to capitalize or when assets consist mostly of intangibles that are not currently reflected in earnings.

It is focused on cash flow rather than accounting practices and allows for different components of a company to be valued separately. Conversely, the biggest challenge of the DCF method is that the determined value is only as accurate as the information it is given, that being the FCF, TV and discount rates. In other words, if the information given to determine the DCF isn’t accurate then the fair value for the investment won’t be accurate and the model won’t be helpful when assessing stock prices due to the inaccuracies. Furthermore, DCF is only good for long term values not short term investing. “The bottom line is that DCF is a rigorous valuation approach that can focus your mind on the right issues, help you see the risk and help you separate winning stocks from losers and help reduce uncertainty.” (McClure, 2011) So, now that we’ve looked at CAPM and DCF, what can we conclude?

in our calculations, as this company exhibited dramatic value differences to others in the sample, (likely to skew our results and prove misleading). Using the average of the revised sample field for each ratio, we inserted Torrington’s values where appropriate to generate an entity value. The findings generated two values for Torrington, 606 million and 398 million. Taking the average of these two numbers, Torrington exhibited a relative value of 502.41 million. Because of the lack of related information given in the case, and the often large differences in measures amongst competitors, different capital structures, internal management strategies, there remained many unknowns in our model. We decided it would be best to use this valuation to reaffirm our assumptions in our DCF valuation. (Please see exhibits)

In financial analysis, analysts use the financial data to monitor and evaluate a firm’s financial position, to plan the future financing, and to reallocate the size of the company and its rate of growth. Financial analysis involves examination of the historical data to achieve the information about the current and future the financial health of the company. They may work in the forecasting and profit analysis. They, like the accountants, prepare the reports. They prepare budget report, work in cost and general account. They analyze the changes in production and service to determine the effects on costs. They work on the graphs. They use statistic to compare the standard costs to the actual costs. They also study the significances of alternative ways of investing money in a particular field. They usually work for the large financial institutions. Particularly, they work

The appeal of this case explains of the building floors which first, second, and third floors were rented to doctors who had hospital staff privileges. However, these doctors are not employed by Providence hospital. It varies with doctors renting on a square-foot need basis; unfortunately the sisters can cancel the lease whenever necessary for ceasing staff privileges. The facts of the case presented indicate the sisters leased the space for $1.10 per square foot a month in the Anchorage area, (Greater Anchorage Area Borough v. Sisters of Charity, 1978). This type of square foot price is competitive for the anchorage area in Alaska. The lease agreement provides the sisters should pay any real property taxes that become payable on the Professional

The free cash flow method is used to gauge “a company’s cash flow beyond that necessary to grow at the current rate… [to ensure companies] make capital expenditures to continue to exist and to grow” (Drake, n.d.). Calculation of free cash flows utilizes various components, including a firm’s value, cash flow forecasts, a firm’s capital structure, the cost of capital, and/or discounted cash flows.

In DCF valuation (Chart 2), long-term growth rate is assumed to be 4%. Change in working capital is calculated as the average of 1997 and 1996 figure and is assumed to be constant for simplicity. Terminal value is valued at $69,398.1 million and NPV is $51,525 million. Stock price will be $37.07, indicating an exchange ratio at 0.46. This is a very conservative valuation as our DCF price is lower than Amoco’s current market price.

Taking all other assumptions in Case’s exhibit 12, the DCF model shows that the reasonable share price range with a discount rate of 13.69% and the terminal value multiples changing from 14x to 16x should be $62~67(see table below). Relaxing the cost of capital value from 12% to 14%, the range of acceptable stock price then becomes $$61~77, which is close to Wasserstein, Perella& Co.’s suggestion.

Answer: Laura Martin is talking with investors. She would meet with many company representatives including the CEO, CFO, operating division chiefs and head of investor relations. She is in connections with these investors via telephone, fax, voice mail or email. It is approximately 900 individual per month.

It is determined that the company worth is $856,518 with a share price of $351.03 per value as per the discounting dividend cash flow valuation approach..In appraising the anticipated premerger performance of the company, the weighted average cost of capital is computed; the worth of the WACC for FVC is 9.2% as depicted in

The standard method of calculating a stock price using the perpetual dividend growth model is done by assessing a company’s dividend one year into the future adding the future expected growth rate. The formula is written as: P0 = D1/(Ke − g), where Ke is the investor required return, D1 is next year’s dividend and g is the

A discounted cash flow analysis measures the value of a company todays based on calculated predications of how much money they will make in the future. This valuation method is used to determine how profitable an investment is. To conduct a DCF analysis, I used future free cash flows predictions ranging from years 2016 through 2026 to get an estimated present value. My ultimate goal in conducting a discounted cash flow analysis for this project is to value to the equity of the stock and find the stock price for the Danaher Corporation.

The current valuation for the company is based on the DCF valuation model which assumes, valuation based a market risk-free rate of