Financial Engineering to Enhance Shareholder Value

pptx

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University of Nairobi School of Physical Sciences *

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Course

DFA 101

Subject

Finance

Date

Nov 24, 2024

Type

pptx

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11

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Financial Engineering to Enhance Shareholder Value for ABC Healthcare Corporation Student’s Name Institutional Affiliation Course Number November 06, 2022
Summary – Financial Condition Analysis An overall financial analysis of ABC Corporation Analyzing financial ratios and their significance for ABC Healthcare Corp. Commenting on the trend analysis of the company based on analysis of financial ratios Comparing company’s financial performance to competitors Recommendation of strategies to maximize shareholder value Summary Identification of tactics that would increase the value to stakeholders. Provide business decision insights and determined ABC's overall financial health.
Summary – Evaluation of Capital Projects Discussion of various methods of capital evaluation Evaluating different options presented and comparing their merits. Deciding in the best project and recommending possible decisions to be made. Summary To comprehend capital budgeting techniques used to analyze proposed investment projects. suggestion of the most beneficial investment undertaking which will yield the greatest return for the business.
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Current Financial Condition ABC Health isn't competitive by industry standards. If we compare ABC Healthcare to HCA Healthcare, we see that it, too, is underperforming the market. Price-to-earnings and price-to-book ratios, for example, both pointed in the right direction. ABC Healthcare Corporation is undervalued and should follow the financial analysis's suggestions.
Overview of Analysis – Trend Analysis The team learned from a trend analysis what they can do now to improve their performance in the future. The price-to-earnings ratio chart makes it obvious that the market value won't change. If earnings per share go down, the price-to-earnings ratio goes up. As the price-to-book ratio rises, it measures how much equity shareholders will pay for a company's net assets.
Data Used Price/Ratio 2019 2018 2017 Market Price 83.62 83.62 83.62 Earnings per share 6.91 7.87 9.15 Price/earnings ratio 12.10 10.63 9.14
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Data Used Price/Ratio 2019 2018 2017 Market price 83.62 83.62 83.62 Book value per share 199.1 209.05 226 Price-to-book ratio 0.42 0.40 .37
Recommendation to Maximize Shareholder Value Increasing short-term profitability by reducing costs is simple. Unnecessary testing and better customer service can cut costs. Investors may see debt repayment favorably if it frees up capital for revenue growth. Paying dividends is a short-term advice that will refund investors' money. Dividends raise share value and can benefit a company long-term.
Tactical Objectives Carry only assets that maximize value. First, value-oriented organizations assess whether purchasers are ready to pay a considerable premium above their anticipated cash flow value for business units, brands, real estate, and other detachable assets. When there are no value-creating investments, return cash to shareholders. This can be done while we have no upcoming investments, reducing the danger of bad financial judgments. Reward middle managers and frontline workers for performing well on key value drivers they affect.
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Financial Tools Financial Statements Provides updates on the company's financial position, performance, and changes. Financial KPI’s Profitability, liquidity, solvency, efficiency, and valuation
References Hayes, A. (2021, May 19). Book value per share (bvps) definition. Investopedia. https://www.investopedia.com/terms/b/bvps.asp . Rappaport, A. (2014, August 1). Ten ways to create shareholder value. Harvard Business Review. https://hbr.org/2006/09/ten-ways-to create-shareholder-value.