TENET HEALTHCARE (THC) Harvard Case Solution & Analysis

Financial Analysis and Valuation Summary 

Financial analysis is done by using various assumptions and methods. Discounted cash flow method is most common among the companies in United States.Valuation summary has been developed from the historical data that was used to project the forecasted financial statements. The data is extracted from the annual results displayedon their website. The references are given at the end of the reports.

A description of the corporation and its competitors

The Tenet HealthCare is a hospital business which is known by its management.As the company carries a vision to serve customers in an exceptional environment which would be far better than others do. Quality, innovation, integrity and transparency are the core values of the company with a mission to provide happier and healthier life to the people.THC is a company having a strong organizational culture back up by qualified and skillful staff. Their service in the market is remarkable in such a way that they come out six health plans, school of health guidance, community advisor services, health insurance policy and health solutions worldwide. These strengths in aggregate made the THC a profitable organization in the hospital industry.

TheU.S. and Industry Economic Outlook

Economy in United States has been poorly regulated due to uncertainties in the last few years. The rate of growth in economy was pointed 2% in respective year as it was forecasted to hit 3% in the last year but it stood at 2.2%. According to the economists the downsize effect is due to the State’s fiscal policy which have been poorly formulated. Thefiscal policy revealed that government has taken an inappropriate measures to address economic issues which eventually effected treasury and federal reserves.Adding to the negative effects was the Federal Reserve, which did not have a strategy to switch from its unsustainable policy.(Witte, 2013).The Economy is regulated by formulating monetary and fiscal policy in core. However, both of the policies failed to address the economic implications which became cause of this downsize. As far as the economy as a whole is concerned it still provides better employment opportunities and address inflation to a minimum formidable level. Furthermore, economists forecastedthat the improvement in employment growth can hit some reasonable targets. As currently there are 176,000 jobs available which is 7% increase in the last year’s proportion. This is a positive implication for the company to serve in a healthier environment. According to Bureau of labor statistics of 2014 actual employments rate is decreased by 6.7% (US Bureau of Labor Statistics, 2014). This decreased shows that the reduction in the labor teams. The people are going more towards the retirements, disabled for this effect. These all are the environment of the United States concerning in the year of 2013 with all the references and explanations of the drop outs.

Data sources and Assumptions

The source of the data for the analysis and the valuation of the Tenet Healthcare is the annual report of 2013 which is extracted from the websites. Further data areextracted from United States “Whitehouse” dealings with attaching the reference to the US and its industry economics. Now the certain assumptions have been taken according to the relevant approach of the analysis. The following assumptions are given below

  • Assumed that the cost of equity will be 6% as compared to the PPT file
  • Cost of Debt is assumed to be 10%, which is the universal in the interest rate
  • The tax rate is calculated on the yahoo website of the actual company data and mentioned the reference in the excel file.
  • Weighted Average Cost of Capital is calculated on the formula which is given below 
  • The forecasted data that are income statements, balance sheet and cash flow statementsare calculated on the past history trends

These are the relevant assumptions and references according to the case extraction. These assumptions are extracted on the best estimations of knowledge and judgments.

Financial Analysis

The financial analysis is done with respect to the said company and evaluates their performance results with its efficiency and effectiveness of the operation. The analysis is done with market and income approaches. These both approaches are different according to their methodology. Income approach usesa discounted cash flow approach and market approach deals with stock price with respect to their earnings, cash flows, revenues and dividends. In this analysis, both methods are used to evaluate........................

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