Gholam Reza Mazyar Nouraee Murali S.Surendran Chittiar

Company Background Initially setup was done in 1914 The new Manager: Dr. Noland Wright 1950s – Good business due to health care industry Milestone 1960s – Public hospital image due to blacks admitted 1914 – Community general hospital serving Blacks 1940s – Increased census & gained accreditation 1970s – Suffer Losses & Bad Debts 1982 – Civil board that guides became inactive 1983 – $ 402,000 budget deficit & $ 749,000 in – $ 20 million debt!! 1993 – Bankrupt!!! 1996 – Large Deficit!!!!!!!!!!!!

Question #1: Profitability View on the Profitability, (nonprofit viability), solvency & Cash Flow? The company has been running in losses For both 1994 and 1995 The ROA was also in the negative region As the losses before income tax increased By 81.24% in 1995 ROE = Equity multiplier*Asset turnover*Nett Income The Increase in debts will increase the equity multiplier, however, the reduction In Nett income caused the drop in ROE for 1995

Question #1: Profitability View on the Profitability, (nonprofit viability), solvency & Cash Flow? Question #1: Solvency The solvency ratios shows a slight improvement in 1995 as compared to 1994 There was a reduction in cash in 1995 due mainly due to adjustments in the Operating activities.

Question #1: Profitability View on the Profitability, (nonprofit viability), solvency & Cash Flow? Question #1: Cash Flow The cash flow on the individual Years shows a delay in the Receivables making it difficult For the company to have liquidity The cycle of days Shows that the cycle is within An acceptable range and the Cash was used and rolled well.

Question #1: Profitability Quick Observation? Question #1: Cash Flow Profitability Solvency Cash Flow The hospital is sunning at very bad losses As the company does not have liquidity to run The company The hospital has not seen a profit in years Due to the operating cost that exceeds the revenue The profit margin and the ROA is in the negative Region suggesting losses

Question #2: Root causes What are root causes of the current condition of the Hospital ? Desegregation impact on the patient ratio in the 60s Non-financial aspects………………… Bad ratings from supplier demanding cash payments Employee layoff due to losses and bad debts Many hand change of management Tightening of admission criteria for patients

Question #2: Root causes What are root causes of the current condition of the Hospital ? Financial aspects………………… No good and knowledgeable manager especially in term of financial No system to controlling the expenses and deducting operation cost Accumulation of lost from previous years regarding to balance sheet Accounting receivable is high regards to balance sheet suggesting bad collection Losses encountered year after year Supply Demand

Question #3: Recommendations New CEO with specialize in financial management background To be specialize and focus in one field for e.g Eye, Heart instead generalize Sell some unnecessary assets and pay off liabilities Merger with another hospital To sale the share at rational price to buy and pay out bank debts to cut down the bank interest ***Base on the analysis Dr. Wright is NOT the man for the job*** What is the chosen recommendation for the hospital?

Question #4: Executing Implementation Plan New CEO with specialize in financial management background Liquidity Activity Leverage Profitability Market Related The new CEO must be able to make Many solid decisions with regards To the 5 indices By selling access equipment as well Space, the hospital can be looking At some level of liquidity to run the hospital The CEO must gain back a good credit Ratings from the supplier **Buy on credit ---- sell on cash*** To create a brand image for the hospital

Looking at current Financial analysis Suggesting ways To cut back MarketingStrategyDevelopment Comparing with Industry average BusinessAnalysis Supplier & Bank credit rating Marketpenetration Commercialization Question #4: Executing Implementation Plan

Thank you…