Premium Essay

Southern Homecare Cost of Capital Case 16

In: Business and Management

Submitted By ealexander4
Words 5558
Pages 23
Cases in Healthcare Finance Case 16 Solution Case 16 - 1 CASE 16 SOLUTION (11/17/10) Copyright  2010 by FACHE
Cost of Capital
Case Information
This case is nondirected, in that it does not contain a specific list of questions that students must answer. Rather, the case contains general guidance or concerns expressed by various parties that students should consider when developing their solutions. If you, as the instructor, want to convert this case to a directed case, and hence provide your students with very specific guidance questions, you can make available the applicable questions for this case contained in the Case Questions section of the online material for instructors.
This case focuses on the estimation of the cost of capital for a business. There is minimal quantitative analysis required, but there are a significant number of conceptual issues that are addressed in the case.
The calculations are not complex, but many of the issues merit a great deal of discussion and require a sound understanding of cost of capital principles.
Model Description
The model takes much of the busywork out of the case, so it enables students to spend more time on interpretation and evaluation. Like most case models, the student and instructor versions differ only in regards to the input data. The instructor’s version contains the complete base case inputs, while these inputs are zeroed out in the student version of the model.
The model uses market data relevant to both the business’s debt and equity as inputs to estimate the costs of debt and equity. Both YTM and YTC costs of debt are estimated, while the cost of equity is estimated using the CAPM, DCF, and Debt cost + Risk premium methods. Note that students must use judgment regarding which component cost estimates should be used in the corporate cost of...

Similar Documents

Premium Essay

The Purpose of This Paper, Prepared by Jessica Chan Under the Supervision of Robert F. Bruner Is About Analyzing the Companies Coca Cola and Pepsi After Pepsi Has Announced a Merger with Quaker Oats Company with a Deal

...The purpose of this paper, prepared by Jessica Chan under the supervision of Robert F. Bruner is about analyzing the companies Coca Cola and Pepsi after Pepsi has announced a merger with Quaker Oats Company with a deal at around $14 billion. With this deal Pepsi would have access to 83.6% of the sport drink market and around 33% of the U.S. noncarbonated-beverage market, followed by Coke with 21%. The paper wants to answer the questions how the latest announcement of Pepsi has an effect on the two companies´ prospects for value creation by showing the company background of both companies, giving a briefly industry overview of the beverage market and competitive events and establishing a financial comparison, especially with ratio and economic profit analysis. In the world Coca Cola and Pepsi have towered as the two leading brands of beverages. In the year 2000, Coca Cola was the largest manufacturer, distributor, marketer of soft-drink concentrates and syrups in the world and its market value reached $110.01 billion. On the other side Pepsi was a $20 billion worth company in 2000, acting in the snack food, soft drink and noncarbonated beverage market. Both companies have reached worldwide expansion of their markets, which include a large product range of beverages, apparel and paraphernalia with their respective logos. Both have grown into longstanding global and social industry leaders. Coca Cola´s annual sales were $20.5 billion which were earned also through a variety......

Words: 487 - Pages: 2

Free Essay

Communications Skills Social Care Practice

...Communication Skills for Social Care Practice Contextualised materials for Essential Skills Communication November 2012 Published by: Northern Ireland Social Care Council 7th Floor, Millennium House 19-25 Great Victoria Street Belfast BT2 7AQ Tel: 028 9041 7600 Website: Email: This resource is free to download as a PDF file from the NISCC website Material within this resource may be reproduced for training and learning purposes only. Copies can be made available in a range of different formats by contacting the Communications Team at the above address. November 2012 1 Guidance for use of this Resource These vocationally contextualised materials are designed to support Essential Skills tutors and trainers who are delivering Essential Skills Communication to Health / Social Care workers and students. They are not intended to be used as a set programme, rather as a resource for tutors, to support the planning and delivery of programmes suited to the needs of their own particular groups of learners. This resource should not be the sole source of task materials, since part of the ethos of essential skills is that the learner should have some choice in their materials for reading, writing and speaking/listening. Tutors can adapt the materials to suit the specific needs of their groups. The resource is suitable for use up to Level 2 Essential Skills Communication. Appendix 1 contains some......

Words: 18248 - Pages: 73

Free Essay

Mckesson Annual Report

...supplemental financial data and corresponding reconciliation to U.S. generally accepted accounting principles (“GAAP”), see Appendix A to this 2011 Annual Report. Non-GAAP measures should be viewed in addition to, and not as an alternative for, financial results prepared in accordance with GAAP. Total Stockholder Return** **The percentages displayed represent total annualized stockholder return for each period presented, including the reinvestment of dividends. Dear Fellow Stockholders, I am pleased to report that McKesson delivered another strong performance in fiscal 2011, marked by outstanding execution in Distribution Solutions, continued success in expanding our relationships with customers and suppliers, and near record levels of capital deployment, including the $2.1 billion acquisition of US Oncology, our largest acquisition in a decade. McKesson generated revenues of $112.1 billion and exceeded expectations for both earnings and cash flow. Earnings per diluted share from continuing operations (EPS) was $4.86,*** and cash from operations was $2.3 billion. We ended the year with cash and equivalents of $3.6 billion. Our strong cash flow creates additional opportunities for the company to create value for our customers, suppliers and stockholders. Our results in fiscal 2011 extend our track record of growing EPS, which we have increased...

Words: 66785 - Pages: 268

Premium Essay


...Coloplast A/S - Annual report 2012/13 Annual report 2012/13 The Coloplast story begins back in 1954. Elise Sørensen is a nurse. Her sister Thora has just had an ostomy operation and is afraid to go out in public, fearing that her stoma might leak. Listening to her sister’s problems, Elise conceives the idea of the world’s first adhesive ostomy bag. Based on Elise’s idea, Aage Louis-Hansen created the ostomy bag. A bag that does not leak, giving Thora – and thousands of people like her – the chance to return to their normal life. A simple solution with great significance. Today, our business includes ostomy care, urology and continence care and wound and skin care. But our way of doing business still follows Elise’s and Aage’s example: we listen, we learn and we respond with products and services that make life easier for people with intimate healthcare needs. Coloplast develops products and services that make life easier for people with very personal and private medical conditions. Working closely with the people who use our products, we create solutions that are sensitive to their special needs. We call this intimate healthcare. Our business includes ostomy care, urology and continence care and wound and skin care. We operate globally and employ more than 8,000 people. The Coloplast logo is a registered trademark of Coloplast A/S. © 2013-10. All rights reserved Coloplast A/S, 3050 Humlebæk, Denmark. Coloplast A/S Holtedam 1 3050 Humlebæk ...

Words: 27785 - Pages: 112

Premium Essay


...National Health System 1 1.1. Organizational structure 1 1.2. Some facts & figures 1 2. What is eHealth, definitions, areas of application, benefits 5 2.1. What is eHealth 5 2.2. Forms of eHealth 5 2.3. Benefits of eHealth 6 3. eHealth framework in European Union countries 7 3.1. eHealth Action Plan 2012 - 2020 7 3.2. eHealth in the European Countries 8 4. Application of eHealth practices 10 4.1. Electronic Health records (EHR) 10 4.1.1. Examples of current EHR use 10 4.1.2. Electronic Health Record in Greece 12 4.1.3. Summing up 14 4.2. Interoperability 15 4.2.1. Defining Interoperability in Healthcare Systems 15 4.2.2. Most widely used contemporary Interoperability standards in Healthcare 16 4.2.3. EPSOS (European Patients Smart Open Services) 17 4.2.4. Interoperability in Greece Healthcare Informatics 18 4.3. Telemedicine & Telecare 19 4.3.1. Types of Telemedicine 20 4.3.2. Services Provided by Telemedicine 20 4.3.3. What Delivery Mechanisms Can Be Used? 20 4.3.4. Telemedicine in Greece...

Words: 36524 - Pages: 147

Premium Essay

Health Care Finance

...Financial Accounting, Sixth Edition Baker−Lembke−King Harvard Business School Accounting Cases Corporate Finance, Seventh Edition Ross−Westerfield−Jaffe Harvard Business Review General Management Articles Harvard Business School Finance Cases This book was printed on recycled paper. Finance Copyright ©2005 by The McGraw−Hill Companies, Inc. All rights reserved. Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without prior written permission of the publisher. This McGraw−Hill Primis text may include materials submitted to McGraw−Hill for publication by the instructor of this course. The instructor is solely responsible for the editorial content of such materials. 111 FINAGEN ISBN: 0−390−55313−1 Finance Contents Ross−Westerfield−Jaffe • Corporate Finance, Seventh Edition I. Overview 1 1 20 34 34 69 97 129 151 151 192 192 214 214 248 1. Introduction to Corporate Finance 2. Accounting Statements and Cash Flow II. Value and Capital Budgeting 4. Net Present Value 5. How to Value Bonds and Stocks 7. Net Present Value and Capital Budgeting 8. Risk Analysis, Real Options, and Capital Budgeting III: Risk 10. Return and Risk: The Capital−Asset−Pricing Model (CAPM) VII. Short−Term Finance 27. Cash Management VIII.......

Words: 226746 - Pages: 907

Premium Essay

Emerging Trends

...independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Acknowledgement India’s competitive advantage lies in the lower production and research cost, its large pool of low cost technical and scientifically trained personnel, and large number of compliance certified manufacturers and service providers, which make us different from others. ASSOCHAM feels that technology incubation is no longer confined to a few institutions; it is a responsibility that we have to share, if we wish to see a better and a healthy future ahead. There is an immense need to develop skilled manpower in the area of healthcare and modern as well as traditional medicines. I am glad that this Summit on Emerging trends in Healthcare will bring forth the journey from research desk to the bedside of patient, as we will look at healthcare at the frontline to identify some common challenges that may help explain the complex nature of healthcare and the scale of the “change” challenge. I wish to thank KPMG for unanimously contributing towards this Knowledge Paper, which gives a rich and comprehensive insight of the trend in healthcare. I would also take the opportunity to thank QCI for supporting this event. The case studies contributed providing the best of their services and support towards improving the healthcare scenario of India, I wish them great success ahead. Last but not the least, I wish to extend a......

Words: 17817 - Pages: 72

Premium Essay


...Learning with Cases INTRODUCTION The case study method of teaching used in management education is quite different from most of the methods of teaching used at the school and undergraduate course levels. Unlike traditional lecture-based teaching where student participation in the classroom is minimal, the case method is an active learning method, which requires participation and involvement from the student in the classroom. For students who have been exposed only to the traditional teaching methods, this calls for a major change in their approach to learning. This introduction is intended to provide students with some basic information about the case method, and guidelines about what they must do to gain the maximum benefit from the method. We begin by taking a brief look at what case studies are, and how they are used in the classroom. Then we discuss what the student needs to do to prepare for a class, and what she can expect during the case discussion. We also explain how student performance is evaluated in a case study based course. Finally, we describe the benefits a student of management can expect to gain through the use of the case method. WHAT IS A CASE STUDY? There is no universally accepted definition for a case study, and the case method means different things to different people. Consequently, all case studies are not structured similarly, and variations abound in terms of style, structure and approach. Case material ranges from small caselets (a few......

Words: 239776 - Pages: 960

Premium Essay

Contemporarry Auditing

...CONTEMPORARY AUDITING REAL ISSUES & CASES MICHAEL C. KNAPP SEVENTH EDITION MAKE IT YOURS! SELECT JUST THE CASES YOU NEED Through Cengage Learning’s Make It Yours, you can — simply, quickly, and affordably — create a quality auditing text that is tailored to your course. • Pick your coverage and only pay for the cases you use. • Add cases from a prior edition of Knapp’s Contemporary Auditing. • Add your course materials and assignments. • Pick your own unique cover design. We recognize that not every program covers the same cases and topics in your auditing course. Chris Knapp wrote his case book for people to use either as a core e book or as a supplement to an existing book. If you would like to use a custom auditing case book or supplement the South-Western accounting book you are currently using, simply check the cases you want to include, indicate if there are other course materials you would like to add, and click submit. A Cengage Learning representative will contact you to review and confirm your order. G E T S T A R T E D Visit to make your selections and provide details on anything else you would like to include. Prefer to use pen and paper? No problem. Fill out questions 1-4 and fax this form to 1.800.270.3310. A Custom Solutions editor will contact you within 2-3 business days to discuss the options you have selected. 1. Which of the following cases would you like to......

Words: 20989 - Pages: 84

Premium Essay

Quality Award Application

...2009 Malcolm Baldrige National Quality Award Application TABLE OF CONTENTS Glossary of Terms and Abbreviations Organizational Profile i Responses Addressing All Criteria Items Category 1: Leadership 1 Category 2: Strategic Planning 6 Category 3: Customer Focus 10 Category 4: Measurement, Analysis, and Knowledge Management 14 Category 5: Workforce Focus 18 Category 6: Process Management 23 Category 7: Results 7.1: Best Quality (Healthcare Outcomes) 27 7.2: Best Customer Service (Customer Focused Outcomes) 32 7.3: Best Financial Performance & Growth (Financial & Market Outcomes) 35 7.4: Best People and Workplace (Workforce Focused Outcomes) 38 7.5: Best 5 Bs (Process Effectiveness Outcomes) 41 7.6: Best 5 Bs (Leadership Outcomes) 45 GLOSSARY OF TERMS AND ABBREVIATIONS APP: Annual Planning Process 5Bs: AtlantiCare’s five “Bests” or performance excellence commitments – Best People and Workplace, Best Quality, Best Customer Service, Best Financial Performance, Best Growth ARMC : AtlantiCare Regional Medical Center ASC: Ambulatory Surgery Center ASPP: Annual Strategic Planning Process A AAAHC: Accreditation Association for Ambulatory Health Care AAI: AtlantiCare Administrators Incorporated AAP: Annual Action Plan B BFP: Best Financial Performance Big Dots: The system-level measurements or targets for each of the 5 Bs (performance excellence commitments).......

Words: 41167 - Pages: 165

Free Essay

Spa & Wellness Industry

... Understanding the Global Spa Industry This page intentionally left blank Understanding the Global Spa Industry: Spa Management Marc Cohen and Gerard Bodeker AMSTERDAM • BOSTON • HEIDELBERG • LONDON • NEWYORK • OXFORD • PARIS • SAN DIEGO • SAN FRANCISCO • SINGAPORE • SYDNEY • TOKYO Butterworth-Heinemann is an imprint of Elsevier Butterworth-Heinemann is an imprint of Elsevier Linacre House, Jordan Hill, Oxford OX2 8DP, UK 30 Corporate Drive, Suite 400, Burlington, MA01803, USA First edition 2008 Copyright © 2008 Elsevier Ltd. All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher Permissions may be sought directly from Elsevier’s Science & Technology Rights Department in Oxford, UK: phone ( 44) (0) 1865 843830; fax ( 44) (0) 1865 853333; email: Alternatively you can submit your request online by visiting the Elsevier web site at http:/ /, and selecting Obtaining permission to use Elsevier material Notice No responsibility is assumed by the publisher for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use or operation of any...

Words: 153860 - Pages: 616