Oracle Systems: Case Study Questions On The Healthcare Industry

If HCA chooses to remain at the current debt ratio take on a lower rating, suspicion might arise among investors. In both cases opportunities exist as well as consequences. The advantages and disadvantages are outlined in Scenario 1 - 3.

Healthcare organizations have a way of handling the issues of the capital structure. The policy of the optimal capital structure in a health institute ensures that the financial strength of the company is obtained. Health organizations need to fund their projects for the sake of smooth running of the activities. However, some of them cannot be able to sell stocks to the public since they are non-profit organizations. Capital structure is a dynamic aspect; instead of static. It depends on the socio-economic sector and the conditions the company is operating in. there are three first types of approaches an organization can take when it comes to the optimal capital structure. It has to do with the balancing between equity and debt.

5. What capital structure would you recommend as appropriate for AHP? Are there any other sources of value, (other than the tax benefits), to AHP’s shareholders from a leverage increase? What are the disadvantages of leveraging this company?

The amount required by the company is $1 million; either using debt or equity or both equity and debt should be used for raising the required amount. Before making any decision about capital structure, both pros and cons of each method of financing have to be analyzed.

Plan B would involve the use of financial leverage. $1.4 million dollars would be raised by selling bonds with an effective interest rate of 11.3% (per annum), and the remaining $1.0 million would be raised by selling common stock at the $10 price per share. The use of financial leverage is considered to be a permanent part of the firm’s capitalization, so no fixed maturity date is needed for the analysis. A 35% tax rate is deemed appropriate for the analysis.

25. Payout and the cost of capital – Comment briefly on each of the following statements:

3. What do you expect the financial position of the business to be in 2006?

4. What capital structure would you recommend as appropriate for AHP? Are there any other sources of value, (other than the tax benefits), to AHP 's shareholders from a leverage increase? What are the advantages and disadvantages of levering this company?

1) How much business risk does AHP face? How much financial risk would AHP face at each of proposed level of debt? a) General risks: • Strategic risk from internal management structure change, due to Laporte was approaching retirement that will cause another big waive of change for the whole senior management team as well as the company’s strategy. • Market risk. Pharmacy had not reached the heavy competition yet during early 1980s, AHP was still the early adopter in the industry, however, the nature of the market will change very quickly follow by the globalization and fast developing of medical technology, efficiency of information communication and financial industry. The competitor will able to launch variously strategies, with wild

3. Your assessment of the competitive and strategic position of HTC Corp. at the time of the case information.

It seems important to begin this case analysis with a evaluation of the company in order to underline some of the key points to keep in mind for this case. Appreciated

Q1. Describe the company selected (using financial and non-financial data) in terms of their history, corporate identity, company structure, capital structure, shareholding, competitive advantage and context in the market place.

Every business organization strives at expanding. However, expansion requires financial resources. There are two forms of financial resources namely debt and equity. What type of advice would a financial advisor by able to provide to their client. Discuss the advantages and disadvantage of each type of capital raising technique. What information could you provide your client on choosing an investment banker? What are the historical relationships between risk and reward of common stocks versus corporate bonds? How does diversification help in risk reduction?

3. Financial Flexibility: this factor is basically about the ability to raise capital under difficult conditions. It mainly depends on how strong are the balance sheets and financial statements. American Home Products Corporation has strong

Gearing Ratio 25 16.28.7. Opinion 16.28.8. Strengths and Weakness 16.28.9. Recommendation for the company to perform better in the next financial period 16.28. Return on Capital Employed 26 16.29.10. Opinion 16.29.11. Strengths and Weakness 16.29.12. Recommendation for the company to perform better in the next financial period 16.29. Debtors Payment Period 27 16.30.13. Opinion 16.30.14. Strengths and Weakness 16.30.15. Recommendation for the company to perform better in the next financial period P. Which Company’s share would I buy if I have the funds now? 28-29References 30-32Annex 1: Starhub LtdAnnex 2: Mobileone Ltd