- For this part of the Final Assessment, you will conduct a 5-year analysis of Jiranna Healthcare’s outpatient operational and financial data in order to determine whether or not the capital project is an attractive project. Refer to “Jiranna Finances” for financial statements to analyze.
- Prepare a 2- to 3-page financial analysis including a supporting Excel spreadsheet to show your work. The focus must be on the content and the depth of your analysis. Unless otherwise indicated, a 5-year trend analysis is expected.
- Complete your analysis as follows:
- Calculate the 5-year net sales, operating expenses, operating income, and net income of Jiranna Healthcare. Once the 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 the 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 the calculations are complete, interpret the resulting data and assess the company’s liquidity.
- Calculate the 5-year debt ratio and times interest earned ratio. Once the 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.
- Ultimately a decision has to be made. Would you recommend the capital project to Jiranna Healthcare? Explain the rationale for your decision.

**Part II: Conduct an Operating Indicator Evaluation**

- For the next part of the Final Assessment, 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 calculation using current technology like Excel Workbook, 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.
- 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.” Then, complete the “Capital Project Case Study Spreadsheet”, which provides cash-flow data (costs and benefits) for the proposal. Download and save the Excel spreadsheet in your working Excel Workbook, and use the information provided to complete the following:
- Calculate the cash inflows and outflows for each year.
- Evaluate the capital project by calculating the following metrics:
- Net present value (NPV)
- Internal rate of return (IRR)
- Modified internal rate of return (MIRR)
- Payback period
- Discounted payback period

- In a 1- to 2-page report including a supporting Excel spreadsheet to show your work, provide your recommendation with rationale, as to whether the project is acceptable, assuming Jiranna Healthcare 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.

**Part III: Conducting 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.
- Open the document “Variance Analysis Case Study,” where you will find data on the expenses, revenue, and outpatient product lines at Jiranna Healthcare.
- Analyze the data and prepare a 3- to 4-page report including a supporting Excel spreadsheet to show your work. 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.
- What was Jiranna’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 outpatient service lines are over budget? Which outpatient service lines are over budget after accounting for workload increases?
- What two actions would you recommend be taken at the mid-year point if you oversaw a fee-for-service healthcare organization? 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?
- What two actions would you recommend be taken at the mid-year point if you oversaw a capitated healthcare organization? 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 healthcare organization normally operate under a capped budget. Additionally, many HMOs also operate under a fixed per member, per month (PMPM) capitated process.