Reference no: EM133253913

Assignment:

Based on the data analysis, recommending at least three ways to maximize shareholder value; actions and conclusions have strong alignment to the data analysis and interpretation. In other words, you recommendations must be strongly aligned to the financial information provided to you (PE. PB, EPS, BVPS, and Market Price) . You must pinpoint the exact financial ratios from ABC's financial analysis that gave you the clues for your recommendations. The CFO for ABC Healthcare Corporation assessed the market value by reviewing its price/earnings ratios. The price/earnings ratio determines the market value of a stock as compared to the company's earnings. The price/earnings ratios are listed in the chart below. To calculate the price/earnings ratio, the CFO took the earnings per share and divided that into the market value. As an example, this means that in 2019 investors were willing to pay $12.10 for $1 of earnings.

Price/Earnings Ratio	2019	2018	2017
Market Price	83.62	83.62	83.62
Earnings Per Share	6.91	7.87	9.15
Price/Earnings Ratio	12.10	10.63	9.14

To further assess market value, the CFO looked at book value per share. The book value per share ratio is the per share value of a company in terms of the equity available to stockholders. The book values per share over the past three years are listed in the chart below:

Price/Ratio Ratio	2019	2018	2017
Market Price	83.62	83.62	83.62
Book Value per Share	199.1	209.05	226
Price to Book Ratio	.42	.40	.37

The price-to-book ratio (P/B ratio) compares a firm's market capitalization to its book value. It's calculated by dividing the company's stock price per share by book value per share. Here, for fiscal year 2019, the book value per share ratio was 0.42. This explains that investors were willing to pay $0.42 for $1 of book value equity. Price to book value is an important measure to see how much equity shareholders are paying for the net assets value of the company. P/B ratios under 1 are typically considered solid investments.

• Based on your analysis, what is your general perception of the company's financial strength? Is it performing well given industry standards? How does it compare to its closest rival, HCA Healthcare? What information do you need in order to conduct such an analysis?
• Given your review, how can it maximize shareholder value? What are focus areas for enhancing shareholder value for the long term? What short-term steps might be necessary for longer-term gains?
• In your analysis you may choose to look at competitive data. You may calculate ratios to gain a true comparison.
• After conducting your analysis, provide at least three recommendations to Maria that maximize shareholder value.

Deliverable Format                                                                                       

The recommendations must be aligned with ABC's financial ratios.