Merger Analysis

Merger Analysis

Answer the following Questions

Question1. Conduct basic financial statement and operating indicator analysis to assess the financial condition of the two (2) health care organizations you selected?

The US market is fully equipped with a large number of health and service providers, these service providers are working in the business of health care and medicine from a number of years and is working for the betterment of the medical health and services industry. In this regard the research paper is based on two health care providers of Unites States, both of the selected companies are from United States and their main business domain is 'Health care'.

In order to access their financial condition the paper highlights the operating and financial situation of both the companies. For the financial condition the financial ratios are the most important tool to analyze the business situation and financial standing of any company. Names of the selected two companies are as follows:

1) Universal Health Services, Inc. (NYS: UHS)

2) Ad-Care Health Systems, Inc.

Balance Sheet (Universal Health Services, Inc. (NYS: UHS)

Total Assets

7,759m

Total Liabilities

5,222m

Shareholders' Equity

2,537m

Total Assets per Share

80.07

Net Assets per Share

26.18

Universal Health Services, Inc. (NYS: UHS) Company Financials

Financial Ratios

Profitability Ratios

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

ROA % (Net)

5.24

4.01

6.76

5.41

4.95

8.46

ROE % (Net)

18.63

12.34

15.8

12.99

11.67

19.9

ROI % (Operating)

15.15

11.75

19.82

16.13

15.57

15.87

EBITDA Margin %

15.54

12.72

13.55

11.67

11.2

15.22

Calculated Tax Rate %

35.54

35.58

35.91

34.56

32.83

33.33

Revenue per Employee

114,682

85,533

130,385

126,802

119,073

115,463

Liquidity Ratios

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

Quick Ratio

1.2

1.04

1.04

1.11

1.3

1.2

Current Ratio

1.63

1.61

1.37

1.41

1.59

1.45

Net Current Assets % TA

6.89

6.71

5.38

6.1

7.96

6.9

Debt Management

2011

2010

2009

2008

2007

2006

LT Debt to Equity

1.59

1.98

0.55

0.64

0.66

0.59

Total Debt to Equity

1.59

1.98

0.55

0.65

0.67

0.59

Interest Coverage

4.47

6.52

11.36

7.71

7.17

9.93

Asset Management

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

Total Asset Turnover

0.99

0.97

1.35

1.36

1.38

1.37

Receivables Turnover

8.3

7.73

8.47

8

7.77

7.66

Inventory Turnover

78.49

62.35

64.9

67.48

69.39

71.42

Accounts Payable Turnover

31.22

24.89

26.88

27.27

26.01

22.79

Accrued Expenses Turnover

12.81

11.7

13.95

14.96

15.33

12.86

Cash & Equivalents Turnover

212.16

288.1

710.71

459.22

303.65

366.02

Per Share

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

Cash Flow per Share

7.39

5.18

5.45

4.56

3.26

1.55

Book Value per Share

23.77

20.31

18.07

15.61

14.43

13.02

Balance Sheet of (Ad-Care Health Systems, Inc.)

Total Assets

214m

Total Liabilities

193m

Shareholders' Equity

21m

Total Assets per Share

15.62

Net Assets per Share

1.56

Ad-Care Health Systems, Inc. (ASE: ADK) Company Financials

Financial Ratios

Profitability Ratios

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

ROA % (Net)

(5.09)

(4.85)

1.55

(4.18)

(0.88)

(9.88)

ROE % (Net)

(40.56)

(25.14)

7.17

(22.8)

(4.47)

(62.64)

ROI % (Operating)

2.69

(3.67)

7.48

0.06

1.61

2.15

EBITDA Margin %

3.9

2.45

9.84

5.24

4.1

2.8

Calculated Tax Rate %

EBT<0

EBT<0

8.14

EBT<0

EBT<0

EBT<0

Revenue per Employee

39,830

24,089

31,550

27,291

26,356

24,143

Liquidity Ratios

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

Quick Ratio

0.54

0.45

-

-

-

-

Current Ratio

0.84

1.04

1.61

0.88

0.77

0.91

Net Current Assets % TA

(3.37)

0.85

8.83

(2.01)

(4.76)

(1.9)

Debt Management

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

LT Debt to Equity

6.43

3.36

2.15

3.76

2.78

2.63

Total Debt to Equity

7.16

3.62

2.24

3.92

2.94

2.95

Interest Coverage

0.33

-

1.47

0.01

0.32

0.17

Asset Management

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

Total Asset Turnover

1.25

0.94

0.94

0.96

0.95

0.91

Receivables Turnover

10.09

8.08

12.62

10.65

10.34

10.32

Accounts Payable Turnover

19.55

23.92

26.06

11.02

6.5

6.3

Accrued Expenses Turnover

15.49

8.68

9.82

-

-

-

Property Plant & Equip Turnover

2.12

1.97

1.61

1.59

1.68

1.66

Cash & Equivalents Turnover

26.85

12.69

9.29

22.55

15.45

12.74

Per Share

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

Cash Flow per Share

0.2

(0.17)

0.44

0.1

(0.03)

0.15

Book Value per Share

1.34

1.6

1.31

1.08

1.17

1.18

Analyze the organization's debt, equity financing, and capital structure of the two (2) organizations

Universal Health Services, Inc. (NYS: UHS)

Debt Management

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

LT Debt to Equity

1.59

1.98

0.55

0.64

0.66

0.59

Total Debt to Equity

1.59

1.98

0.55

0.65

0.67

0.59

Interest Coverage

4.47

6.52

11.36

7.71

7.17

9.93

Capital Structure

Type

%

Amount

Debt

57.7

3.5 Bil

Preferred

---

---

Equity

42.3

2.5 Bil

Historical

Type

%

Amount

Debt

63.2

3.8 Bil

Preferred

---

---

Equity

36.8

2.2 Bil

Analysis

The interest coverage ratio shows that the company is able to pay off its debt this means that if the company takes loan from the bank it has the ability to pay interest expense on it. Long term debt to equity ratio indicates that the external internal equity ratio. It defines the long term financial soundness of the company. It highlights the available cushion to the external holders for the liquidation purpose. It is the will of the business owner to utilize the outsider's funds in order to finance his business so that it can reduce the risk factor of their investment and to increase their earnings (per share) by paying a lower fixed rate of interest to outside.

Ad-Care Health Systems, Inc. (ASE: ADK)

Debt Management

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

LT Debt to Equity

6.43

3.36

2.15

3.76

2.78

2.63

Total Debt to Equity

7.16

3.62

2.24

3.92

2.94

2.95

Interest Coverage

0.33

-

1.47

0.01

0.32

0.17

Capital Structure

Type

%

Amount

Debt

64.2

4.55 Bil

Preferred

---

---

Equity

35.8

3.12 Bil

Type

%

Amount

Debt

58.92

3.81 Bil

Preferred

---

---

Equity

41.08

2.92 Bil

Analysis

It is the main objective of the business to lower down the cost of capital and to increase ...