Financial Performance of UHS

Introduction3

Financial and Ratio Analysis4

Profitability4

Debt Management5

Asset Management5

Book Value per Share6

Current industry trend and its effect on UHS's financial performance6

Shortage of qualified staff and investment needed for new equipment6

How to minimize the impact of the trend7

How to improve the financial performance of Universal Health Services7

References8



Financial Performance of UHS

Introduction

Universal Health Services (UHS) operates mainly through itself and it's subsidiaries in nearly all parts of USA. It has one of the largest medical services network in USA. It provides all sorts of services in relation to medical. Its network covers a large number of Acute Care and surgical Hospitals, behavioral health centers, ambulatory surgery centers and radiation oncology centers. UHS has its existence mainly in USA, but it is also running its operations in Puerto Rico. UHS's headquarters are in King of Prussia, Pennsylvania and has 65,400 employees up till December 31, 2011. Allen Miller is the chairman of the Board of Directors and Chief Executive Officer of UHS since 1978.

The company has its segmentation mainly in terms of acute hospitals services, behavioral health service and other related services. UHS has been showing great potential for growth since its inception in 1978. Both its Revenue and Net profits have grown throughout the years.

Financial and Ratio Analysis

The ratio analysis of the company are as follows, the period covered is from 2009 to 2011.

Profitability Ratios

12/31/2012

12/31/2011

12/31/2010

ROA % (Net)

5.57

5.24

4.01

ROE % (Net)

17.66

18.63

12.34

ROI % (Operating)

15.17

15.15

11.75

Liquidity Ratios

12/31/2012

12/31/2011

12/31/2010

Quick Ratio

1.21

1.2

1.04

Current Ratio

1.57

1.63

1.61

Net Current Assets % TA

6.26

6.89

6.71

Debt Management

12/31/2012

12/31/2011

12/31/2010

LT Debt to Equity

1.37

1.59

1.98

Total Debt to Equity

1.37

1.59

1.98

Interest Coverage

5.27

4.47

6.52

Asset Management

12/31/2012

12/31/2011

12/31/2010

Total Asset Turnover

0.88

0.99

0.97

Receivables Turnover

6.82

8.3

7.73

Inventory Turnover

70.92

78.49

62.35

Per Share

12/31/2012

12/31/2011

12/31/2010

Cash Flow per Share

8.4

7.39

5.18

Book Value per Share

27.8

23.77

20.31

Profitability

The return on Assets (ROA) which shows how efficiently and effectively the company has utilized its Assets in generating its revenue. During the course of the 3 years in review, UHS's ROA has not improved that much, it has only gone from about 4% to 5.5%.

The return on Equity (ROE) is one of the ratios that are of much concern to the shareholders, as it shows how much the company has made on the amount that shareholders have invested. If the whole 3 years are to be considered, it would be seen that ROA has substantially improved over from 12.34% in 2009 to 17.66% in 2011. However, it can be seen that during the years between 2010 and 2011, the ROA has fallen from 18.63% to 17.66, which would be an alarming sign for the shareholders. The value of their investment has fallen during the last year.

Debt Management

The Debt to Equity ratio has significance for both the shareholders and the creditors. It shows the proportion of Debt in relation to Equity. It shows the financial leverage (risk) of the firm. Up till 2011, the ratio has been decreasing which is a good sign for the company as it is becoming less risky for UHS. The ratio was almost 2 in 2009 and has decreased to 1.37; this could be due to increase in the shareholder equity or due to the decrease of debt.

Interest coverage ratio has great importance for the creditors of ...