Healthcare Management Challenges

This assignment delves into the complexities of healthcare management. It examines pressing issues such as physician workforce projections, the strategic management of health organizations, and the impact of primary care systems on population health. Additionally, it considers self-care definitions, integrated patient care models, and the financial management strategies employed by healthcare providers.

Managing Financial
Resources and Decisions

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1. Advantages and disadvantages of obtaining listing on stock exchange..................................1
2. Methods which contributes to obtain listing on London stock exchange..............................3
3. Methods used to raise capital in London Stock Exchange......................................................7
TASK 2............................................................................................................................................8
2.1 Calculation of share prices....................................................................................................8
a. Calculation of cost of ordinary share capital...........................................................................8
b. Calculation of cost of preference shares.................................................................................8
c. Calculation of the cost of debenture capital............................................................................8
d. Calculation of weighted average cost of capital.....................................................................8
2.2 Importance of financial planning..........................................................................................9
2.3 Informational needs of directors, senior managers and junior managers..............................9
2.4 Impact of finance on financial statements.............................................................................9
TASK 3..........................................................................................................................................10
3.1..............................................................................................................................................10
3.3..............................................................................................................................................11
a. ...............................................................................................................................................11
b. viability of proposal..............................................................................................................12
TASK 4..........................................................................................................................................12
4.1 Different types of financial statements prepared by the organisation and information
provided by them ......................................................................................................................12
4.2 Different formats of income statements..............................................................................12
4.3 .............................................................................................................................................13
a. Calculation of different ratios................................................................................................13
b. Explanation stated with each ratio which calculated above..................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Financial management is important concept which includes application of effective
approaches and tools which contributes in effective management of money within the
organisation in such manner that objectives are accomplished according to predetermined
standards. It is the responsibility of the top management is to direct the functions which are
related to funding. This will includes the use of methods of accounting to effectively record the
transactions which are happen in organisation on regular basis and provide accurate and reliable
information timely. It improves the understanding of managers of organisation is to effectively
interpret the financial position of organisation and build appropriate strategies to strengthen their
position in market. This report contains four different parts which includes description about
Milner Chemicals Plc is a chemical manufacturing organisation which was established in 1935,
Brian Harris Chartered Accountants firm, X Plc. And Wordsworth Plc (Ahnquist, Wamala, and
Lindstrom, 2012).
In the present report explain about advantages and disadvantages which are associated
with listing on London stock exchange, methods which assist in the process of obtaining listing
in London Sock Exchange, methods which contributes to raise capital in London stock exchange,
calculation of cost of ordinary shares, preference shares, debenture capital and WACC,
importance of financial planning and impact of finance which is observed upon financial
statements. Also, preparation of different type of budgets as per their requirements in
organisation and main financial statements and information which is provided by each statement.
TASK 1
1. Advantages and disadvantages of obtaining listing on stock exchange
Milner Chemicals Plc is manufacturing organisation which was established in 1935. It
deals in manufacturing of chemicals. The whole business is owned by the Milner family and few
thousand shares are held by employees through employee share option schemes. Over the period
of time the business grows with effective rate. Unexpected event is occur in 2014 when elder
brother of Richard, who is William Milner is died due to cancer. After that business of Milner
Chemicals Plc is handled by Richard who observed that skilled and loyal workforce is developed
if they are able to built strong financial base. The credit crunch is arise between 2008 to 2012
which impacts the financial performance of organisation. It is observed that UK is tuned up their
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position and become one of the leading manufacturing base in the world. After taking the step by
the Governor of Bank of England that the interest rates prevails low through which significant
high is shown in stock market.
Richard observed that for rapid expansion need to have high amount of funds raised at
low cost. So, advised by the senior manager is to list organisation on London Stock Exchange to
raise capital. This will associated with different type of advantages and disadvantages which are
gathered by Milner Chemicals Plc after listing are defined below:
Advantages of listing tocompany
 Listing of Milner Chemicals Plc on stock exchange provides the basis from the market
valuation of the organisation. There are large number of sources are opened with the
listing of cited organisation on London Stock Exchange to effectively raise the adequate
amount of funds. This will also helps to assess the success of organisation in market over
the period of time on regular basis.
 Such organisations are able to list their business on stock exchange which fulfil the
regulations and conditions provided by them. So, this will bring transparency in the
business value and helps to attain the trust and loyalty of clients and shareholders. This
will provides an access to acquisition currency, where shares are might use of to make
acquisition instead of cash.
 Helps to motivate the employees through providing rewards whose value is clear to them.
In private organisation, it is difficult to assess the value of shares and options which
provided to the employees as reward but in case of organisation they able to easily assess
the value (Almalki, FitzGerald and Clark, 2011).
 Listing of Milner Chemical Plc helps in development of their high brand image in market
through which they have the ability to attract high calibre board members. It is happen
because on listed organisation members have trust there are least possible of chance of
discrepancies. This will provides the opportunity regarding development of their image
and reputation.
 Listing also helps in marketing of the name of organisation as it appears in stock market
reports which is published in newspapers and analysed on TV channels.
 Listing helps in attraction of the institutional investors of the domestic and foreign
countries.
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Disadvantages of listing company
 One of the disadvantage which is associated with the listing of organisation on stock
exchange is required to disclose all the important aspects to investors. They have to
disclose their financial reports on periodic basis as per the regulations provided by the
regulatory agencies (Boulware And et. al., 2016 ).
 Huge amount of cost is required to effectively manage the shares of organisation on stock
exchange. This process includes time consuming administration as required to do
constant and regular announcements of their interim and final financial results, directors
holdings and trading updates which is required to appoint experts to perform the
functions in optimum which occur huge large amount of cost.
 It is observed that the companies which are listed on stock exchange such as Milner
Chemical Ltd faced large pressure of market which forces them is to focus on gaining
better short term results instead of long tern growth. Also, investors scrutinized the
company's performance on regular basis which impact their ability to attract the investors
when the price of their share is low (Cascio, 2018).
 The listed companies are required to comply large number of regulatory requirements
which are designed by the regulatory authorities for the protection of shareholders. There
are many additional restrictions are imposed upon the organisation such as:
◦ Required to obtain trading certificate from Companies House
◦ Need to have attest two directors
◦ More strict rules regarding loans to directors
◦ AGM is required to helps to make the decisions but private organisation have the
liberty to take decisions on the basis of resolution also.
2. Methods which contributes to obtain listing on London stock exchange
The main aim behind the consideration of main market is to expand the business
operations in global market place through raising fund. Admission on the stock market provides
the access to the organisation of Europe's deepest pool of capital through which large amount of
benefits are ascertained such as high profile and liquidity. So, it is the reason that financial
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advisor of Milner Chemical Ltd. Advised is to access stock market as it provides various options
about raise funds to attain success and growth in market.
It is the obligation upon the management of Milner Chemicals Ltd. Is to follow the
procedure which contributes to effectively register the organisation on London stock exchange
through fulfilment of all regulations (Chartier, 2014). In this regard, required to appoint the
professionals which allows the company is to arrange the all necessary requirements and
fulfilling conditions through which they can get listed on stock exchange within given frame of
time period. The different steps and regulations need to adhere by Milner Chemical Ltd. Is
defined below:
Appointing advisors: To effectively get registered on stock exchange through
complying legal requirements provided by regulatory agency, need to appoint appoint
professional advisors. Such advisors is required to have adequate experience of listing of
organisations on Stock exchanges, simultaneously ascertain the views of employees before its
final appointment to gather success in least period of time. Advisors plays an important role in
planning of the crucial aspects which plays the main role in the process of entering into primary
stock market. The role of different kind of advisors in the process of listing is understood from
the points which are mentioned below:
 Sponsor: The appointment of sponsor is necessary as it provides guidance and direction
to organisation through providence of appropriate approaches and procedures which are
considered as the key steps to enter into market. They have the responsibility is to direct
the management of Milner Chemical Plc on the basis of their experiences and ability
regarding admission procedures and provide the adequate recommendations on the listing
boards, guidelines, regulations which are compulsory to adhere while performing the
activities related to the admission on London Stock exchange (Fotaki, 2011).
 Broker: Another important intermediary which performs crucial function in organisation
in respect of the listing process. The main aim of such person in the organisation is to
provide the guidance in respect of the pricing of shares and generation of the interest of
the client and investors on the shares through designing of effective marketing of trading
of their shares to attain future results in optimum manner.
Reporting Accounting: This will includes the procedure of reporting of the different
financial statements of the organisation which depicts the financial position in last five years.
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Such reports are important to produce in front of the regulatory authorities as they not doing any
mistakes and frauds in past years in respects of conducting business activities. Such reports helps
to fulfilling the particular legal needs and provide assistance to the directs in the process of
registration of organisation on stock exchange.
Lawyer: The main role of lawyer in the organisation is provide the advice on the legal
issues which can arise in the process of entering into the market. It helps the organisation
regarding prevention from various legal penalties and provisions which have negative impact
upon their image in market. They assist the management of organisation about the disclosure of
the legal aspects and obligations which are required to present at the different phase of listing
process (Genet and et. al., 2011).
Preparation of organisation for stock market: In the process of preparing organisation
many steps are need to perform in effective order. Such different kind of aspects which plays an
important role in the process of preparing organisation for market entry is defined below:
 Assets and liabilities: Analysis of the assets and liabilities is important because it
improves the understanding regarding acquirement of necessary assets which are
important to operate the business functions of organisation and effectively pay off their
debt liabilities within stipulated period of time whenever they arise.
 Shareholder arrangements: It is the process where arrangements are made to ensure
that shareholders are ready to sell their shares during the process of flotation (Ginter,
2018).
 Share capital: It includes about making regular arrangements in share capital through
spilt total share capital into new share capital which is need to hold by the organisation
every time with themselves.
 IPR: This will includes about protection of the inventions and assets of organisation
through proper use of the tools of IPR includes Patent, trademark and copy right. This
required to do before floatation of the shares in market.
Insurances: It is the process where required to take insurance for coverage of damages
which arise to the organisation in process of conducting business activities. In this regard, need
to follow the guidelines which are provided by certain insurance policies.
Joining the London Stock Exchange market: This will provides the information
regarding time period which is taken while entering into the main market through following
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specific route. While calculating the time period required to assess the factors which has adverse
impact on the process of entering into market. Some of the procedures are compulsory in nature
which are not skipped. Such aspects are defined below:
 Creating companies prospectus: It is the duty of the management of organisation is to
create the prospects in true manner which depicts all the necessary information to the
UKLA. It is refers as the UK listing authority which has the role regarding authentication
of the information provided by the organisation in process of listing in main market.
Prospectus is considered as the primary document which contain diversified information
used by the investor to enhance their decision making (Hunter, D. J., 2016).
 Application for admission to trade: For trading of their securities need to apply to
London Stock exchanges and UKLA through which their securities are registered in
primary market for first time buying and selling by the individuals.
 Marketing about the floatation of company: This includes the process where
marketing activities are taken by the management of organisation to spread awareness
among the investors for their attraction in large number. Major role is played by the
marketing activities in the success and growth of organisation on registration day. In
performance of these functions major role is played by the broker their their assistance in
different activities.
 Completion of Underwriting agreement: While providing the shares in stock market
first time required to underwrite their shares to prevent themselves from the situation of
non subscription. In this regard, required to do agreements with directors, owners and
shareholders is to purchase such amount of shares from which their offering is under
subscribed.
 Keep and impact day: It is the day where are all necessary approvals are get by the
organisation regarding different aspects which are involved under prospectus. All such
information is announced at the time of flotation of their shares in main market.
All the steps which are defined above is related with the trading of shares on London
Stock Exchange first time. Here, actual trading of the shares is started after getting permission
from LSX.
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3. Methods used to raise capital in London Stock Exchange
There are large number of organisation is listed on London Stock Exchange which is
around the number of 2500. This stock exchange provides the option of trading in four different
markets such as main market, professional securities market, specialist fund market and AIM.
One of the main target of all organisation is to raise funds to expand business operations and in
this regard best option for listing is main market. It helps the organisation is to gain sudden
profits in the situation of the high price of their shares (Kakuma and et. al., 2011).
 Large organisation feel familiar to trade in main market as they have experience and
established in nature. Every organisation which is qualified to register themselves in
London Stock Exchange requited to take prior approval from UK listing authority which
is one division of Financial conduct authority. After approval of UKLA, there is not right
with LSE to stop companies to trade their shares on exchange.
 Professional securities market is such market which is used by the organisation for the
purpose of raising capital through issuance of special securities, debts, convertible shares,
depository receipts etc.
 In Specialist fund market, where main emphasis is provided to professional, highly and
institutional investors only.
 AIM is considered as the best market market for such companies which are small in
nature and having the aim of growing in future years. To use this segment need to covert
the organisation as public company (Kirch, Henderson and Dill, 2012).
Different methods of entrance
Initial public offer: This includes raise of funds through providing their shares for
subscription by the general public. It is refers as IPO if shares are first time provide by the
organisation in market for trading. Also, large amount of cost is required to invest to grab the
attention of investors which is generally used by the big organisations.
Placing: It is the process where shares are allotted to specific group of institutional
investors. It is the option in which funds are raised at lower cost which also provides freedom to
organisation(Kringos and et.al., 2013).
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TASK 2
2.1 Calculation of share prices
a. Calculation of cost of ordinary share capital
Ke= (D1/Po) +Growth
Here,
P0=Current Price
D1= Expected dividend
G= Growth
(0.108/2)+8%= 13.4%
b. Calculation of cost of preference shares
The formula which helps to calculate the value of preference shares is:
Dividend/price
The interest rate which is associated with preference share is 12%.It observed that it is
less that ordinary share price which was 2.
Cost of preference shares is 12/1.2=10%.
c. Calculation of the cost of debenture capital
= .010(1-.20)= 8%
d. Calculation of weighted average cost of capital
WACC= We*ke+Wp*Kp+Wd*Kd
= (.3636*13.4)+(.1818*10)+(.1818*8)=4.86+1.82+1.45=8.13%
Here,
We= Equity weight
Ke= Cost of equity
Wp= Weighted preference
Kp= Cost of preference
Wd= Weighted debt
Kd= Cost of debt
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2.2 Importance of financial planning
Financial planning is important concept which includes activities related to forecasting
about the amount of funds which are required in future period of time to carry on their business
functions. The planning is important for procurement, investment and administration of funds of
organisation.
Importance of financial planning
 Planning helps in effective management of income through which effectively paid their
tax payments, expenditures etc.
 Planning helps to increase the flow of cash through effective monitoring on spending
patterns and expenses. It helps to maintain the liquidity in organisation.
 Effective financial planning helps to expand the business operations to attain the large
number of benefits (Kringos, Boerma, W., van der Zee and Groenewegen, 2013).
 It also helps in enhancing their profit margins.
2.3 Informational needs of directors, senior managers and junior managers
Director, senior manager and junior manager has different role in organisation. They have
to take many important decisions as per their role and function in organisation for which they are
required to have different type of informations. Directors of organisation required to have proper
knowledge about the sources from where they adequately raise funds as it helps to take effective
decision regarding growth aspects of organisation. One the other hand, senior and junior
manager performs the role regarding performance of different functions through coordinating
different efforts of department. In this regard, need to have information about production,
marketing, administration departments (Luo and et. al., 2012).
2.4 Impact of finance on financial statements
Finance is the important aspect which has direct impact upon the financial statements.
Lack of funds has negative impact upon the strength of organisation about preparation of
effective strategies to attain desired objectives. Financial statement of organisation depicts the
financial position of organisation which they gathered from their different business offerings. It
also helps to attain the sustainability in their operations to take adequate measures which helps to
raise the funds as per requirements.
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TASK 3
3.1
Production budget is calculated:
Production budget of
gold & silver tap
Gold tap Silver tap
Particulars
Per unit
amount Amount
Per unit
amount Amount
direct material 20 40000 15 60000
direct labour 50 100000 25 100000
variable overhead 10 20000 10 40000
fixed overhead 80000 80000
Budgeted cost 240000 280000
profit margin (25%) 60000 70000
Desired selling price 150 300000 87.5 350000
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Income statement of gold and silver tap
Particulars Amount(gold) Amount(silver)
Sales 300000 350000
expenses:
direct material 40000 60000
direct labour 100000 100000
variable overhead 20000 40000
fixed overhead 80000 80000
budgeted profit and loss 60000 70000
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3.3
a.
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b. viability of proposal
Investment appraisal technique helps to gather the information regarding profitability
which is attached with project. The net present vale which is attained from above project is
1688523.511. It seems that positive result is attained so, viable to start project. The total invested
amount is recovered in 4.16 years (Singer and et. al., 2011).
TASK 4
4.1 Different types of financial statements prepared by the organisation and information provided
by them
There are many types of annual accounts are formulated by the organisation annually to
determine their position in market and analyse that financial objectives are achieved or not. The
main purpose of preparation of such accounts is to provide information to external stakeholders
and investors to attract them is to invest large amount of funds in organisation. Such different
kins of statements and their use in organisation is defined below:
Income Statement: This document is prepared by the organisation to record the amount
of income and expenditure which is incurred by the organisation over the period of time. It helps
to assess the profit and loss which is attained by the organisation at the end of year (Naledi,
Barron and Schneider, 2011).
Balance sheet: This document provides the information about the organisations assets
and liabilities which own by them. From analysis of such data, easy to interpret that organisation
is able to pay off their existing debt or not (Financial Management Resources. 2017).
Cash flow statements: This statement provides the information about inflow and
outflow of cash over specific period of time. It provides the opportunity is to maintain the
liquidity within the organisation to perform their daily functions effectively (Shanks, 2016).
4.2 Different formats of income statements
Organisation Clubs and Charities
Charging high cost price the production to earn Not any value is added to facilities which are
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profits provided to member
All the amount are record in cash book All income and payments are record in receipt
and payment account
The revenue is attain from sales Here, amount of revenue is received from
members in form of subscription
To assess net and gross profit P&L account is
formulated
To attain the amount of expenditure and
income, income and expenditure account is
prepared
The equation of balance sheet is Owners equity
+liabilities
Here, equation of balance sheet presented as
accumulated funds+liabilities
4.3
a. Calculation of different ratios
Particular 2015 2016 Industry
Current Ratio 12654/8878=1.425 8928/7060=1.26 1.85
Quick ratio 7568/8878=0.8524 5428/7060=0.77 1.21
Gross Profit
Margin
4312/15712*100=27.44
%
2163/6375*100=33.93 37.50
Profit margin 72/15712*100= 0.45 388/6375*100=6.09 7.80
Return on total
assets
72/14026*100=0.513 388/13286*100=2.90 6.70
Inventory turnover 11400/5086=2.24 4212/3500= 1.20 4.1
Average
Collection period
15712/7568=365/2.07=
176 Days
6375/3500=
365/1.82=200 days
75days
Interest earned 8 times 7 times 15 times
Gearing ratio 3,776/10000*100=38% 1,868/10000*100=18.68
%
25%
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b. Explanation stated with each ratio which calculated above
It is analysed from the above report that current ratio of organisation is increased in 2016
as comparison to 2015. In 2015, it is 1.425 and now in 2016, reached to the mark of 1.26 but not
achieve the benchmark which is provided by industry. Same condition is visible in quick ratio.
Gross profit margin ratio is assessed of two different years which are 2015 and 2016 as 0.45 and
6.09 but still not achieved the mark of 7.80. Similarly, the turnover ratio also not touched the
benchmark provided by industry (Richard and Shea, 2011). Capital gearing ratio is only one
which reached beyond to the mark which is 38% in 2015 more than the standard of industry as
25%.
CONCLUSION
It has been concluded from the above report that Milner Chemical Plc is going through
many issues which impact their growth activities in adverse manner. This will not provides the
opportunity to the management of organisation is to expand their operations due to lack of funds.
One of the effective medium which is observed that to list the organisation on London Stock
Exchange to raise the adequate amount of funds. It helps in successful expansion of organisation
operations. X limited has not adequate accounting department which impact the valuation
process of their shares. Brian Harris is chartered accountant firm which helps to calculate the
value of ordinary, preference, debenture and WACC. Also large number if benefits are gathered
with the help of effective financial planning such as high performance, optimum utilisation of
resources etc. Different kind of budgets are prepared to ascertain the information which helps to
build important strategies to get the optimum results. Also, observed that there are many
statements which are prepared by the organisation annually to depicts the financial position to
the investors to improve their understanding. Wordsworth Plc faced many difficulties and to
check out the validity of the opinion of shareholders, analysing the financial position of
organisation through helps of different ratios like Current and Quick ratio etc.
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Richard, A.A. and Shea, K., 2011. Delineation of self‐care and associated concepts. Journal of
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Online
Financial Management Resources. 2017. [Online]. Available through:
<http://www.minnesotanonprofits.org/nonprofit-resources/financial-management/financial-
managment-resources-overview>.
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