Accouting Project – Mostly Financial Statement Analysis Part 2

Please use the outline format in attachment. All sections must be completed accordingly.

ACCT 4336 Class Project
Summer 2012

I.
Introduction

A. Objective of paper

The objective of this paper is to analyze HCA Holdings’ financial statements and other supporting documents in order to identify the company’s strengths and weaknesses. In doing so, this paper will also assess how the company’s overall performance affects its credit worthiness and investment potential.

B. Summary of findings

II. Chapter Web Case Solutions

A. Chapter 1

Required

1

. Briefly summarize the business description

HCA Holdings is a holding company for HCA (Hospital Corporation of America). HCA owns, manages and/or operates hospitals, surgery centers, diagnostic and imaging centers, radiation and oncology therapy centers, rehabilitation and physical therapy centers, and other facilities across the nation and England. HCA’s general and acute care hospitals provide medical and surgical services, which include inpatient care, intensive care, cardiac care, diagnostic services and emergency services.

2

. What is the industry?

HCA Holdings is involved in the healthcare industry.

3. What is the primary sector? Secondary sectors?

4. Select a number of analysts’ ratings. What is your opinion of those ratings? Are they too high or too low?

5. Review and comment on the three most recent news headlines.

6. List the peer companies.

7. For your company and each peer company, list the current sales.

8. For current sales, select the peer weight for your company.

9. For current sales, select the peer aggregate.

10. For current sales, select the peer mean.

11. For current sales, select the peer median.

12. Comment on how dominant your company appears to be in relation to the peer set of companies.

13. Who are the external auditors? What is the date and opinion on the last statement?

B. Chapter 2

Required

Review directors for name, principal occupation, or employment/other business affiliation, age, and director service.

1. Comment on the composition of the directors.

2. List the Board Committees.

3. For each Board Committee, determine the responsibilities of the committee.

4. For each non-employee director, determine the components of director compensation.

5. Under “Compensation Discussion and Analysis ,” review the compensation committee report on executive compensation. Comment.

6. Review the summary compensation table (five most highly compensated executives).

a. What are the components of compensation?

b. Comment on the trends in compensation.

7. In your opinion, how significant is the compensation?

C. Chapter 3

Required

Comment on the trends in:

1. Total current assets.

2. Total assets.

3. Total current assets vs. trend in total assets.

4. Total current liabilities.

5. Total current assets vs. total current liabilities.

6. Total liabilities.

7. Total shareholders’ equity.

D. Chapter 4

Required

Comment on the trends in:

1. Sales.

2. Cost of goods sold.

3. Total operating expenses.

4. Total operating income.

5. Net income before preferred dividends.

6. Fully diluted earnings per share.

7. Describe equity earnings.

8. Comment on the trend in equity earnings.

E. Chapter 5

Required

a. For Your Company:

1. Comment on significant trends in the 5-year common-size balance sheet.

2. Comment on significant trends in the 5-year common-size income statement.

b. For a Peer Company:

3. Comment on significant trends in the 5-year common-size balance sheet

4. Comment on significant trends in the 5-year common-size income statement.

5. Compare the 5-year common-size balance sheet of your company with that of the peer company selected for the 5-year common-size balance sheet.

6. Compare the 5-year common-size income statement of your company with the peer company 5-year common-size income statement.

F. Chapter 6

Required

Comment on the 5-year trends for the following ratios:

1. Quick ratio.

2. Current ratio.

3. Receivables turnover.

4. Receivables days sales.

5. Inventory turnover.

6. Inventory days sales.

7. Sales to working capital.

8. Estimate the operating cycle.

9. For your company, comment on the 5-year trends in the liquidity ratios.

10. For peer company, comment on the 5-year trends in the liquidity ratios.

a. Compare your company liquidity ratios with the peer company liquidity ratios.

11. Compare the liquidity ratios for four competitors.

G. Chapter 7

Required

Comment on the 5-year trends in the following debt ratios:

1. Times interest earned.

2. Total debt/equity.

3. Total liabilities/total assets.

4. For your company, comment on the 5-year trends in the debt ratios.

5. For the peer company, comment on the 5-year trends in the debt ratios.

6. Compare your company debt ratios with the peer company debt ratios.

7. Compare the debt ratios for four competitors.

H. Chapter 8

Required

Comment on the 5-year trends in the following profitability ratios.

1. Net income/net sales.

2. Net income/total assets.

3. Net income/common equity.

4. Net income/invested capital.

5. Sales/plant and equipment.

6. Sales/total assets.

7. For your company, comment on the 5-year trends in the profitability ratios.

8. For the peer company, comment on the 5-year trends in the profitability ratios.

9. Compare your company’s profitability ratios with the peer company profitability ratios.

10. Compare the profitability ratios for four competitors.

I. Chapter 9

Required

1. Review the earnings per share forecasts. Comment on how these forecasts could influence the market value of the common stock.

2. What is the price/earnings ratio for your company?

3. Comment on how the price/earnings ratio is influenced by the earnings per share forecasts.

4. What is the “Market Capitalization” for your company?

5. Why is the market capitalization different than the common stockholders’ equity?

6. Comment on the trend in the dividend payout.

J. Chapter 10

Required

1. Select the cash flow from operating activities for the five most recent years.

2. Comment on the trend in cash flow from operating activities.

II. Firm, Industry, and Environment

A. Description of firm and its management

B. Discussion of competitive environment

C. Economic climate and outlook

D. Other factors, e.g. government regulations,

Labor relations, litigation

III. Evaluation of Financial Statements

A. Overview

B. Short-term liquidity

C. Capital structure and long-term solvency

D. Operating performance and efficiency

E. Market measures

IV.
Outlook, Summary, and Conclusions

A.
Outlook for performance, earnings projection

B.
Investment potential – use several different methods to value the stock price

C. Credit assessment

D. Summary and conclusions

IV. Appendix

A. Include copy of FINSAS Spreadsheet for your company, including financial ratios.

VI.
Footnotes

VII. Bibliography

STEPS OF A FINANCIAL STATEMENT ANALYSIS

1. Establish objectives of the analysis

2. Study the industry in which the firm operates and relate industry climate to current and projected economic developments

3. Develop knowledge of the firm and the quality of management.

4. Complete the FINSAS spreadsheet that is available online for your company.

5. Evaluate financial statements

Tools:
Common size financial statements

Key financial ratios

Trend analysis

Structural analysis

Comparison with industry competitors

Major areas:
Short-term liquidity

Capital structure and long-term solvency

Operating efficiency and profitability

Market ratios

Segmental analysis (when relevant)

6. Summarize findings based on analysis and reach conclusions about firm relevant to the established objectives.

START COLLECTING DATA AND INFORMATION NOW! DON’T WAIT!

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