Case HEALTH CARE MANUFACTURING downloaded from Harvard cousepack
SEE THE IS/BS MODEL & FLOW DIAGRAM TABS -YOU ARE NOW WORKING WITH RATIOS, FORECASTS, VALUATION, POSSIBLY FINANCING
Learning Objectives
At the end of the course, to apply financial analysis
and decision making techniques to size-up a business and make
a recommendation about its value. This is a comprehensive
case in the guise of an acquisition.
Reading Sections of the Cohen finance book as necessary for review, and Guideline Solutions for previous weeks as necessary.
Questions ANSWER IN THE TABS AS LABELLED
1 Size-up HCM using historical ratio analysis and a discussion of its business risk and financial risk.
The Q1 tab reproduces HCM's financial statements and forecasts for your convenience.
2 Value the business from Mr. Thompson's (the owner) viewpoint, explaining fully.
Cost of capital and valuation templates are provided for your convenience.
3 Value the business from the potential buyer's (Great Wall) viewpoint, considering the changes that it will make, explaining fully.
The changes it would make will change the cash flows.
4 Should Mr. Thompson consider liquidating HCM instead of selling it? Defend your position.
5 As Haiping Sun, make a recommendation to the client Great Wall, about how much it should pay for HCM, explaining fully.
6 If HCM is sold at the price you recommend, calculate Mr. Thompson's IRR since buying the business in 1987, or,
explain why it is not possible to do the calculation).
7 As Haiping Sun, explain how Great Wall might structure the transaction, i.e., how can they raise the money to buy HCM?
The Financing template is provided for your convenience.
OPTIONAL 8 Is HCM a target for a leveraged buyout? Explain your position based on calculating HCM's debt capacity?
See further instructions on the Q7-8 tab.
THERE IS NO SINGLE CORRECT ANSWER.
THE PURPOSE OF THE ASSIGNMENT IS TO DEMONSTRATE
WHAT YOU HAVE LEARNED TO DO IN THIS COURSE.
Attachment:- Wk7 Assignment Template HCMBA6234 2014(1).xlsx