Main Activities in Corporate Finance

RUNNING HEAD: CORPORATE FINANCE
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Investment appraisal and shareholders wealth

Corporate Finance
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Executive Summary
Corporate finance is an aspect of finance that highlights the different sources of funds used
by corporate to raise funds, efficient capital structure for companies, and activities that
managers follow in order increase shareholder value. This report highlights the dividend
payment theories and the impact of dividend payment on share prices. In order to
understand these concepts a company listed in Colombo stock exchange has been chosen that
is Lanka Hospital. In order to understand the financial position, dividend payment method,
dividend per share, earnings per share and its impact on share prices comparison is done with
other players in the market that are Nawaloka Hospital and Asiri Hospital. At last, the report
includes recommendations to companies about dividend policy and strategies that can be
adopted by companies to improve its shareholders value.

Corporate Finance
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Table of Contents
Part 1: Introduction....................................................................................................................2
Dividend and earnings per share of six years.........................................................................3
Share price of three companies for six years..........................................................................4
Part 2 : Dividend Theories.........................................................................................................5
Part 3 Strategies and Shareholder Value....................................................................................7
Bibliography.............................................................................................................................10

Corporate Finance
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Part 1: Introduction
Lanka Hospital
Lanka Hospitals is multi-speciality care hospital situated in Sri Lanka. The hospital was
opened in 2002 as a branch of Apollo Hospitals but later on acquired by Sri Lanka insurance
in 2009 and renamed as Lanka Hospitals. The vision of the hospital is to become a preferred
private hospital by people and to contribute to the greater extent for building of healthier
community. At present, hospital has staff of 1,868 people and has capacity of 28,000 patients
in hospital. Further, revenue of hospital in 2018 was Rs. 7.08 billion and net income was Rs
870 million (LankaHospital,2018).
Nawaloka Hospital
Nawaloka Hospital is one amongst the biggest competitor of Lanka Hospital in private sector.
There are chain of hospitals of Nawaloka across the country. The unique proposition and
services that hospital provide includes facilities of Intensive care unit, Thoracic surgery,
Coronary care units and Laparoscopic surgery. The hospital was established in 1985 as a
private healthcare institution. The objective of hospital is to provide affordable healthcare
services to all of patients that come from different strata of society. In 2018, the net income
of hospital was Rs 180 million (NawalokaHospital,2018).
Asiri Hospital
Asiri Gospital is also a well renowned named in Sri Lanka in private hospitals. The hospital
started its first operation in 1986. There are four other branches of this hospital in Sri Lanka
specialised in serving some services. In 2018, the net profit of hospital was Rs 1740 million
and revenue of hospital during the year was Rs 12,025 million. These three hospitals are