Jiranna Finances Case Study Project

This article provides a solution for an assignment about Jiranna Finances Case Study Project.

Permalink: https://premiumacademicaffiliates.com/jiranna-finances-case-study-project

premiumacademicaffiates.com has the top and most qualified writers to help with any of your assignments. All you need to do is place an order with us.

You are an administrator at Arizona Health Services (AHS), a large hospital system. You have been asked to assist in evaluating the financial feasibility of purchasing Jiranna Healthcare, a managed care organization in the San Jose area. For this part of the Performance Task, you will conduct a 5-year analysis of Jiranna Healthcare’s operational and financial data in order to determine whether or not it is an attractive acquisition. Refer to “Jiranna Finances” for financial statements to analyze.

Prepare a 2- to 3-page financial analysis. The focus must be on the content and the depth of your analysis. Unless otherwise indicated, a 5-year trend analysis—including the most recent year of available data—is expected.

…

Solution

Jiranna Finances Case Study Project

Part I: Analyze Organizational Financial Data

Net sales show the number of sales generated by the company in a given period.

Particulars	2009	2010	2011	2012	2013
Gross patient services revenues (non-GAAP)	8,870.00	9,490.00	10,400.00	11,200.00	12,050.00
Less deductions from revenues (non-GAAP)	(780.00)	(890.00)	(1,000.00)	(1,500.00)	(1,600.00)
Net patient service revenues	8,090.00	8,600.00	9,400.00	9,700.00	10,450.00
Other operating revenues	519.00	633.00	679.00	717.00	980.00
Net sales	8,609.00	9,233.00	10,079.00	10,417.00	11,430.00

Operating Expenses

operating expenses	2009	2010	2011	2012	2013
Salaries and wages	5497	5678	5890	6170	6800
Supplies	823	850	855	890	905
Utilities	558	576	590	595	620
Insurance	44	46	49	54	70
Depreciation	168	173	175	178	188
Interest	142	146	154	179	198
Bad debts	363	375	400	455	500
Other operating expenses	987	1299	1560	1300	1350
Total operating expenses	8582	9143	9673	9821	10631

Operating Income

Operating income

27

90

406

596

799

Net Income = Total Revenue + Non-operating Income – Total Expenses

	2009	2010	2011	2012	2013
Net sales	8609	9233	10079	10417	11430
Non-operating income	154	195	245	220	290
Total operating expenses	8582	9143	9673	9821	10631
Net Income	181	285	651	816	1089

From the observed trend analysis, it is worth noting that there is an increase in each aspect, which shows higher revenues and incomes. This shows a going concern about the Arizona Health Services firm. It is a good operating trend for the enterprise.

Profit Margin = (Gross profit)/(Net Sales)*100

	2009	2010	2011	2012	2013
Net Income	181	285	651	816	1089
Net sales	8609	9233	10079	10417	11430
Profit Margin	2%	3%	6%	8%	10%

Asset Turnover = (Net sales)/(average Total Assets)

Total Assets	7350	7952	8476	9145	9847
Average Total assets		7651	8214	8810.5	9496
Net sales	8609	9233	10079	10417	11430
Asset Turnover		1.20677	1.22705	1.18234	1.20366

Return on Assets=(net income)/(average total Assets)

	2009	2010	2011	2012	2013
Total Assets	7350	7952	8476	9145	9847
Average Total assets		7651	8214	8810.5	9496
Net Income	181	285	651	816	1089
Return on Assets		0.037250033	0.079254931	0.092616764	0.114679865

Return on net worth = (net income)/(average total Assets)

net income after tax	181	285	651	816	1089
Total Net Assets	4300	4585	4521	4978	5413
	0.04209	0.06216	0.14399	0.16392	0.20118

The company’s profitability increases after every as highlighted by the ratios. This increases its shareholder value, as seen from the return on net worth.

Current Ratio= (Current assets)/(current liabilities)

	2009	2010	2011	2012	2013
Current Assets	1830	1912	2176	2595	3187
Current liabilities	650	587	655	667	684
	2.81538	3.25724	3.32214	3.89055	4.65936

Cash at Hand

	2009	2010	2011	2012	2013
Cash	30	45	50	75	88

Working capital = Current assets – Current liabilities

	2009	2010	2011	2012	2013
Current Assets	1830	1912	2176	2595	3187
Current liabilities	650	587	655	667	684
Working Capital	1180	1325	1521	1928	2503

The company is highly liquid, and its current ratio is above one, which indicates a strong ratio. The current ratio also indicates an increasing trend, commendable, and a good gesture to the company.(Jiranna Finances Case Study Project)

Debt ratio=(Total liabilities)/(total assets)

	2009	2010	2011	2012	2013
Total Liabilities	3050	3587	3955	4167	4434
Total Assets	7350	7952	8476	9145	9847
debt ratio	0.41497	0.45108	0.46661	0.45566	0.45029

Times Interest earned = (Earnings before interest and tax)/(total interest payable on the debt)

	2009	2010	2011	2012	2013
Net Income	181	285	651	816	1089
Total interest payable	3200	3200	3200	3200	3200
Times interest earned ratio	0.05656	0.08906	0.20344	0.255	0.34031

            The company has strong long-term solvency, which is growing every year. This means that the company can service its long-term debts as highlighted by the Times’ interest earned ratio. The Debt ratio is, however, not healthy for the company since it is above 20%.(Jiranna Finances Case Study Project)

DuPont Analysis= Profit Margin * Asset Turnover* Equity Multiplier

DuPont Analysis	2009	2010	2011	2012	2013
Net Profit Margin	2%	3%	6%	8%	10%
Asset Turnover	1.17129	1.20677	1.22705	1.18234	1.20366
Equity Multiplier	1.7093	1.72223	1.80409	1.85504	1.82774
DuPont	0.04209	0.06415	0.14298	0.17181	0.2096

            From the yearly DuPont analysis, the company is increasing its return on equity every year. This is a strong indication of higher profitability and earnings. This company shows all these earnings and returns are attributed to the tremendous growth in the profit margins, which is its key strength.

            Lastly, I would recommend the purchase of the company since it shows high profitability and returns. Its liquidity levels and working capital ratios indicate great company strength and performance through its solvency ratios are not indicative of a healthy company. With these factors, I would therefore recommend its purchase since it is highly efficient in its operations and assets, as shown by the analysis.(Jiranna Finances Case Study Project)

Part II: Recommendations on Jiranna

            The calculations indicate that the company has a Net Present Value (NPV) of $38,469. Since this is a positive NPV, implementing the new project is acceptable. When the NPV is positive, the investment is expected to be profitable and should be considered. However, NPV calculations rely on assumptions and estimates; thus, they can be affected by errors. Other methods of determining the viability of the project include finding the Internal Rate of Return (IRR) and calculating the payback period.(Jiranna Finances Case Study Project)

            The calculations indicate that the company has an Internal Rate of Return (IRR) of 14%. Since the IRR at 14% is greater than the cost of capital, which is at 11%, we accept the implementation of the project. Through IRR, we can estimate the project’s annual budget. Ideally, the higher the IRR, the more viable the investment. However, IRR assumes that all positive cash flows will be reinvested at the same rate as the project. This limits IRR’s accuracy in reflecting the profitability and costs of the project (Marchioni & Magni, 2018). In addition to the IRR, the MIRR also projects the viability of the investment project. Hence when the MIRR is higher than the expected return, the investment would be considered attractive. In this case, considering the MIRR, the investment is viable. The current Modified Internal Rate of Return (MIRR) is 13%, which is higher than the required rate of return. Hence per the MIRR, the investment is viable.(Jiranna Finances Case Study Project)

As you continue, premiumacademicaffiates.com has the top and most qualified writers to help with any of your assignments. All you need to do is place an order with us. (Jiranna Finances Case Study Project)

            Alternatively, the payback method also estimates how long it would take for the original investment to be repaid. The payback approach estimates how long it would take to reach the break-even point (Arjunan & Kannapiran, 2017). It is imperative to note that shorter paybacks equate better profitability. Besides, the approach helps the company’s set policies that help in decision making. According to the company’s policy, it accepts projects with a payback period of fewer than 3.5 years. With this project having a payback period of greater than 3.5 at 3.6 years, we reject the implementation of the project based on its payback period. It would be against the company’s policy to facilitate the project. Despite accepting the project’s financial projections as shown by the NPV, IRR, and MIRR, I recommend not implementing the project, based on the fact its payback period exceeds the company’s set duration. (Jiranna Finances Case Study Project)

Part III: Budgeting Evaluation

            The calculations indicate that the hospital’s original profit forecast can he highlighted as follow:

Profit forecast = Forecasted revenue – Forecasted expenses

                         50,155,710 – 48,069,860 = 2,085,850

Halfway through the fiscal year, the revised projection for FY11 profits can be analyzed as follows.

Half-year profit achievement = Revenue – Expenses

                        24,220,949 – 25,256,062 = -1,035,113

The hospital has a loss of 1,035,113 half the year, translating to an estimated projection of 2,070,226 loss if the same trend continues. The revised projections are a loss and would continue as the year progresses.(Jiranna Finances Case Study Project)

            Secondly, the inpatient service line over budget is diseases and disorders of the circulatory system, diseases and disorders of the digestive system, diseases and disorders of the ear, nose, mouth, and throat and diseases and disorders of the female reproductive system. This is after considering their budgeted expenses with the actual expenses incurred at the half of the year. However, when we factor in the workload increases, we find that no inpatient service has an over-budget accounting for increased workload expenses.(Jiranna Finances Case Study Project)

            At mid-year, adopting a fee-for-service hospital model would require that the hospital focus on high revenue-generating services maximize the income generated. This will increase the level of total revenue collected from the services rendered. Diseases with many patients should be prioritized under this case. Simultaneously, the hospital should reduce its focus on highly expensive services that deprive the hospital of its earned income while minimizing the low client numbered diseases. This will maximize the net gains of the hospital. The problem areas on which to focus attention on, based on their performance and best practices, would necessitate the focus on newborns and other neonates with conditions originating in the perinatal period, which is a high-income area that can maximize the net gains and human immunodeficiency virus infections which is has a high number of patients receiving treatment at the hospital. On the other hand, the hospital should reduce its focus on diseases and disorders of the nervous system since, with its equivalent expenses, it attracts a low number of patients seeking its treatment.(Jiranna Finances Case Study Project)

            In a capitated hospital set up, I would recommend its payment structure adjustment, with services with many patients receiving a lower amount of payment and the services with a low number of patients receiving the largest amount. This will have a higher attraction and retention of the patients by the doctors while maintaining the costs attached at a minimal and manageable level. Pregnancy, childbirth, and the puerperium inpatient service should be assigned the least payment with the highest pay for diseases and disorders of the ear, nose, mouth, and throat.

            The hospital should also endeavor to focus on inpatient services that have a lower number of clients. This will be a way of ensuring that the expenses remain low and at the minimal point. Diseases and disorders of the ear, nose, mouth, and throat are critical services that should be highly embarked on in the facility. By optimizing services and the quality of care in these areas, the facility will attract many patients with these complications. Besides, efforts should be taken to improve the corporation and engagement of the facility with its community. This will help improve the community’s understanding of the facility’s core services. Offering occasional clinics in partnerships with local partners could improve awareness and facilitate an increase in patients in these specific areas.(Jiranna Finances Case Study Project)

            Working with a capped budget would also mandate modern medical tools that improve clinical efficiency and performance. The capped budget should drive quality improvement efforts that focus on maintaining low costs and offering high-quality care. While finding the balance can be challenging, the facility can attain it by selecting areas that could benefit from hospital efficiency, such as reducing wait times in the ED. Besides improving patient satisfaction, the facility will deliver high-quality care at affordable costs to the patient.(Jiranna Finances Case Study Project)

            In conclusion, the calculations project a loss at midyear. The estimations factor in the workload increases and establish that there were no budgets. At mid-year, the focus should be on increasing the revenue by enabling high performing service areas. Increasing the operational efficiency in these areas to improve the facility’s financial performance would help increase revenue. Operational efficiency and patient satisfaction should be at the core of the facility’s operations under a capped budget. This will ensure a steady patient base while also facilitating quality improvement and optimized healthcare delivery.(Jiranna Finances Case Study Project)

As you continue, premiumacademicaffiates.com has the top and most qualified writers to help with any of your assignments. All you need to do is place an order with us. (Jiranna Finances Case Study Project)

References

Arjunan, K. C., & Kannapiran, K. (2017). Cost‐benefit Analysis and the Controversial Reinvestment Assumption in IRR and NPV Estimates: Some New Evidence against Reinvestment Assumption. Economic Papers: A journal of applied economics and policy, 36(3), 351-363.(Jiranna Finances Case Study Project)

Marchioni, A., & Magni, C. A. (2018). Investment decisions and sensitivity analysis: NPV-consistency of rates of return. European Journal of Operational Research, 268(1), 361-372.(Jiranna Finances Case Study Project)

Question

In this Assessment, you will use information from several case studies and other documents to demonstrate your ability to make recommendations for organizational decisions based on analyses of financial data.

Professional Skills:Written Communication, Technology, and Critical Thinking and Problem Solvingare assessed in this Competency.

Access the following to complete this Assessment:

• Jiranna Finances
• Capital Project Case Study, Part 1
• Capital Project Case Study, Part 2
• Variance Analysis Case Study
• Academic Writing Expectations Checklist
• Download the Academic Writing Expectations Checklist to use as a guide when completing your Assessment. Responses that do not meet the expectations of scholarly writing will be returned without scoring. Properly formatted APA citations and references must be provided, where appropriate.(Jiranna Finances Case Study Project)
• Be sure to use scholarly academic resources as specified in the rubric. This means using Walden Library databases to obtain peer reviewed articles. Additionally, .gov (government expert sources) are a quality resource option. Note:  Internet and .com sources do not meet this requirement. Contact your coach or SME for guidance on using Library Databases.(Jiranna Finances Case Study Project)
• Carefully review the rubric for the Assessment as part of your preparation to complete your Assessment work.

As you continue, premiumacademicaffiates.com has the top and most qualified writers to help with any of your assignments. All you need to do is place an order with us. (Jiranna Finances Case Study Project)

This Assessment requires submission of two (2) files. Save your files as follows:

• Save the written sections of Parts I, II, and III as FM007_firstinitial_lastname (for example, FM007_J_Smith).
• Save the spreadsheet for Part II as FM007_spreadsheet_firstinitial_lastname.

When you are ready to upload your completed Assessment, use the Assessment tab on the top navigation menu.

Instructions

Before submitting your Assessment, carefully review the rubric. This is the same rubric the assessor will use to evaluate your submission and it provides detailed criteria describing how to achieve or master the Competency. Many students find that understanding the requirements of the Assessment and the rubric criteria help them direct their focus and use their time most productively.(Jiranna Finances Case Study Project)

Rubric

This assessment has three-parts.  Click each of the items below to complete this assessment.

Part I: Analyze Organizational Financial Data

You are an administrator at Arizona Health Services (AHS), a large hospital system. You have been asked to assist in evaluating the financial feasibility of purchasing Jiranna Healthcare, a managed care organization in the San Jose area. For this part of the Performance Task, you will conduct a 5-year analysis of Jiranna Healthcare’s operational and financial data in order to determine whether or not it is an attractive acquisition. Refer to “Jiranna Finances” for financial statements to analyze(Jiranna Finances Case Study Project).

Prepare a 2- to 3-page financial analysis. The focus must be on the content and the depth of your analysis. Unless otherwise indicated, a 5-year trend analysis—including the most recent year of available data—is expected.

Complete your analysis as follows:

• Calculate the 5-year net sales, operating expenses, operating income, and net income of Jiranna Healthcare. Once calculations are complete, interpret the resulting data and explain the significance of the trend results.
• Calculate the 5-year total profit margin, asset turnover, return on assets, and return on net worth. Once calculations are complete, interpret the resulting data and determine the company’s profitability.
• Calculate the 5-year current ratio, day’s cash on hand, and working capital. Once calculations are complete, interpret the resulting data and assess the company’s liquidity.(Jiranna Finances Case Study Project)
• Calculate the 5-year debt ratio and times interest earned ratio. Once calculations are complete, interpret the resulting data and explain the company’s long term solvency.
• Complete a DuPont analysis for each of the five most recent years. Once calculations are complete, interpret the resulting data and determine the company’s individual DuPont characteristics (e.g., total margin, total asset turnover & equity multiplier) and trends across the analysis period.(Jiranna Finances Case Study Project)
• Ultimately a decision has to be made. Would you recommend purchasing Jiranna Healthcare? Why?

Part II: Case Study #2

For the next part of this Performance Task, you are expected to complete a number of calculations, and then interpret the numbers to provide recommendations based on these analyses. It is essential both to show your work and calculations, and to demonstrate how these calculations support your conclusions. Be sure to explain your reasoning. You will be assessed on the accuracy of your quantitative analyses and the quality of the evidence you use to support your conclusions.(Jiranna Finances Case Study Project)

Imagine that you are an administrator at Jiranna Healthcare who has been asked to analyze cash-flow data to determine the costs and benefits of implementing a new capital project. For background, read “Capital Project Case Study, Part 1.” Then, complete the “Capital Project Case Study, Part 2” spreadsheet, which provides cash-flow data (costs and benefits) for the proposal. Download and save the Excel spreadsheet, and use the information provided to complete the following:(Jiranna Finances Case Study Project)

• Calculate the cash inflows and outflows for each year.
• Calculate the following metrics:
  • Net present value (NPV)
  • Internal rate of return (IRR)(Jiranna Finances Case Study Project)
  • Modified internal rate of return (MIRR)
  • Payback period
  • Discounted payback period
• In a 1- to 2-page report, provide your recommendation with rationale, as to whether the project is acceptable, assuming Jiranna has a corporate policy of not accepting projects that take more than 3.5 years to pay for themselves, and assuming an 11% cost of capital(Jiranna Finances Case Study Project)

Part III: Conduct a Budgeting Evaluation

You are an administrator at Jiranna Healthcare. You have been asked to conduct a budget variance analysis: analyzing performance by comparing budgeted workload, revenue, and expenses for a range of different service lines, with actual workload, revenue, and expenses for those service lines.(Jiranna Finances Case Study Project)

Open the document “Variance Analysis Case Study,” where you will find data on the expenses, revenue, and inpatient product lines at Jiranna Healthcare.

Analyze the data and prepare a 3- to 4-page report. In your report, address each of the five following questions. In each case, show the calculations that you conducted to answer the question. Then, explain your conclusion and how your calculations support your reasoning.(Jiranna Finances Case Study Project)

• What was the hospital\’s original profit forecast (assume away any issues with depreciation, taxes, etc.)? Halfway through the fiscal year, what is the hospital\’s revised projection for FY11 profits?
• Which inpatient service lines are over budget? Which inpatient service lines are over budget after accounting for workload increases?(Jiranna Finances Case Study Project)
• What two actions would you recommend be taken at the mid-year point if you oversaw a fee-for-service hospital? In other words, where are the problem areas on which you would focus your attention, and who might provide ideas for \”best practices\” based on their performance?(Jiranna Finances Case Study Project)
• What two actions would you recommend be taken at the mid-year point if you oversaw a capitated hospital? In this case, the revenue spreadsheet would be replaced with an overall budget of $50 million with which to operate (rather than being able to bill for each episode of patient care). Federal, state, county, and city hospitals normally operate under a capped budget. Additionally, many HMOs also operate under a fixed per member, per month (PMPM) capitated process.(Jiranna Finances Case Study Project)

Read More:

https://premiumacademicaffiliates.com/sample-job-description-of-a-worker-at-lmc/

https://premiumacademicaffiliates.com/organizational-goals-analysis/