Financial Evaluation, Budgeting, and Project Analysis at GHOV Hospital

This project provides a comprehensive financial evaluation of the General Hospital of Veneraville (GHOV), including an analysis of financial ratios, budgeting processes, and project evaluations. The financial evaluation covers profitability, asset usage, capital structure, and investment ratios, offering insights into the organization's performance in 2016 and 2017. The budgeting section details revenue and expense data, including special government budget allocations, ancillary outpatient revenue, and clinical service revenue, projecting figures for 2018 and 2019. It also includes monthly revenue and expense breakdowns. The project evaluation assesses Project A, providing a detailed cash flow analysis, net present value (NPV) calculations, and internal rate of return (IRR) analysis to determine project viability. The analysis aims to provide a clear understanding of GHOV's financial standing and the potential success of its projects.

Running head: FINANCE
Finance
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Part 1: Financial Evaluation.......................................................................................................2
Part 2: Budgeting........................................................................................................................5
Part 3: Project Evaluation.........................................................................................................11
Reference and Bibliography:....................................................................................................17

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Part 1: Financial Evaluation
Particulars 2017 2016
Revenue € 7,85,000.00 € 7,22,200.00
Gross profit € 7,16,000.00 € 6,58,720.00
Net profit € 4,36,605.00 € 4,00,862.00
Total assets € 18,94,467.00 € 13,29,377.00
Total liabilities € 11,29,000.00 € 9,58,266.00
Total equity € 7,65,467.00 € 3,71,112.00
Interest € 8,500.00 € 8,000.00
EBIT € 6,80,200.00 € 6,24,710.00
Market value price per
share € 5.50 € 4.75
Number of shares 3,00,000 3,00,000
Profitability
Net profit margin 55.62% 55.51%
Gross profit margin 91.21% 91.21%
Asset Usage
Asset turnover ratio 41.44% 54.33%
Return on assets 23.05% 30.15%
Capital Structure ratio
Debt to equity ratio 1.47 2.58
Debt ratio 0.60 0.72
Interest coverage ratio 80 78
Investment ratio
Price earnings ratio 3.78 3.55
Earnings yield 0.26 0.28
Earnings per share 1.46 1.34
Commenting on the performance of the organisation:
After evaluating the above calculations the overall performance of the organization
can be derived this directly indicates the relevant improvements in their current operational
capability. From the evaluation of the profitability ratio, the net profit margin of the
organization is seen to improve slightly from the levels of 55.51% in 2016 to 55.62% in

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2017. This improvement is relatively due to the high level of net profit that has been achieved
by the company during the first year. Moreover, the calculation of gross profit margin
relatively indicates no certain improvements, as the value has relatively remained same for
both the fiscal years. This directly indicates that the reduction in administrative expenses has
relatively allowed the organization to experience higher profits from its operations (Vogel
2014).
The calculations of asset usage ratio directly indicate the low efficiency of the
management, which has relatively reduced the effective usage of the available assets. The
Asset turnover ratio of the organization has relatively fallen from the levels of 54.33% to
41.44% in 2017. In the similar instance, the overall return on assets of the organization has
also fallen from the levels of 30.15% to 23.05%. This decline in asset usage is relatively due
to the increment in total Assets of the organization in 2017, which was not complemented by
the increment in net profit and revenues.
The capital structure ratio of the organization as a relatively improve over the period
of two fiscal years, where the decline in debt accumulation has allowed the organization to
attend solvency position. The debt to equity ratio of the organization has a relatively declined
to the levels of 1.47 in 2017 from 2.58 in 2016. Moreover, debt ratio of the organization has
also declined from the levels of 0.72 in 2016 to 0.60 in 2017. The decline in both debt to
equity ratio and debt ratio is due to the increment in total equity, which was not
complemented by the increment in total liabilities of the organization. This relevantly helps in
improving the debt structure of the organization and reducing the composition of debt. The
interest coverage ratio of the organization is also increased from the levels of 78 to 80, which
directly indicates the positive attributes of the organization. Kou, Peng and Wang (2014)
stated that capital structure allow the investors to detect the solvency position of the
company, which helps them make investment decisions.

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Investment ratio of the organization has the relatively indicated a positive attribute
where both the price earnings ratio and earning person has relatively improved over the
period of two fiscal years. These improvements in the investment ratio directly indicate a
positive indication to the investors who can increase the returns from investment in the
organization. Moreover, the earnings of the organization have minutely declined during the
fiscal year of 2017. Therefore, from the evaluation of the financial ratio it could be identified
that the performance of the organization has relatively improved during the fiscal year of
2017 (Greco, Figueira and Ehrgott 2016).
Indicating whether GHOV needs a better financial structure:
The financial ratios of capital structure relatively help in detecting the overall
financial structure of the organization. The current deposition of the organization is
considered normal which needs to be improved in future. The debt equity ratio needs to be at
the levels of 1, while the debt ratio needs to be below 0.45 to minimize the negative impacts
of Finance cost. Capital structure of the organization relatively portrays their capability to
support operations and invest in additional projects. Hence, the current capital structure of the
organization needs to be below 0.45 from 0.60 levels, which can only be achieved by
reducing the debt and increase equity capital. The increment in the composition of equity and
reduction in debt would eventually allow the organization to reduce their finance cost, which
wide eventually increases the net profit of the company (Wahlen, Baginski and Bradshaw
2014).

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Part 2: Budgeting
Revenue and expense data 2016 2017 2018 Change 2019
Operating revenues
Special government budget allocation - - 15,000.00 3.50% 15,525.00
Ancillary outpatient revenue 650.00 663.00 682.89 5.00% 717.03
Clinical service 355.00 356.60 358.20 4.50% 374.32
Non-core revenues 1,005.00 1,019.60 16,041.09 3.59% 16,616.97
Main government budget allocation 200,000.00 210,000.00 250,000.00 0.00% 250,000.00
Total revenue 201,005.00 211,019.60 266,041.09 0.22% 266,626.38
Operating expenses
Consultant's salaries 15,000.00 15,375.00 15,759.38 2.50% 16,153.36
General practioners salaries 12,500.00 12,656.25 12,814.45 1.25% 12,974.63
Nursing salaries 10,250.00 10,378.13 10,507.85 1.25% 10,639.20
Receptionists 56.00 56.14 56.28 0.25% 56.42
Pharmacists salaries 11,750.00 11,896.88 12,045.59 1.25% 12,196.16
Emergency room service 15,000.00 15,075.00 15,150.38 0.50% 15,226.13
IT Staff 8,750.00 8,968.75 9,192.97 2.50% 9,422.79
Finance
Administrative salaries 875.00 896.88 919.30 2.50% 942.28
Imdemnity insurance 125.00 128.00 131.00 2.50% 134.28
Total operating expenses 74,306.00 75,431.14 76,577.51 1.53% 77,749.15
Supplies
Office and administration 275.00 309.60 348.54 12.58% 392.39
Operation rooms 8,750.00 8,748.97 8,974.70 2.58% 9,206.25

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X-ray equipment 5,500.00 5,498.97 5,640.85 2.58% 5,786.38
Pharmacy and medicines 15,000.00 15,387.00 16,002.48 2.58% 16,415.34
cleaning and linen 1,500.00 1,538.70 1,578.40 2.58% 1,619.12
write off of material 875.00 897.58 920.73 2.58% 944.48
central salaries 758.00 777.56 797.62 2.58% 818.20
Utilities-electricity and communication 72,000.00 73,857.60 75,763.13 2.58% 77,717.82
Total supplies expenses 104,658.00 107,015.97 110,026.44 2.61% 112,898.13
Financing
Loan interest 1,250.00 1,250.00 1,250.00 0.00% 1,250.00
overdraft interest 21.25 21.25 21.25 0.00% 21.25
Total finance expense 1,271.25 1,271.25 1,271.25 0.00% 1,271.25
Total expenses 180,235.25 183,718.36 187,875.20 191,918.53
Surplus/Deficit 20,769.75 27,301.23 78,165.89 74,707.85
Balance Brought forward 19,244.75
-
63,510.02 14,651.87
Financial resources available 20,769.75 46,545.98 14,655.87 89,359.72
Capital budgetary available
Infrastructural requirements 110,000.00 125,000.00
Equipment
X-ray machine 1,500.00
New operating theatre equipment
Ambulances 25.00 56.00 4.00
Financial requirements 19,244.75 -63,510.02 14,651.87 -35,640.28

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Revenue and
expense data
Janu
ary
Febr
uary March April May June July August
Septem
ber
Octobe
r
Novem
ber
Decemb
er
Operating
revenues
Special government
budget allocation
1,29
3.75
1,29
3.75
1,293.7
5
1,293.7
5
1,293.7
5
1,293.7
5
1,293.7
5
1,293.7
5
1,293.7
5
1,293.7
5
1,293.7
5 1,293.75
Ancillary
outpatient revenue
59.7
5
59.7
5 59.75 59.75 59.75 59.75 59.75 59.75 59.75 59.75 59.75 59.75
Clinical service
31.1
9
31.1
9 31.19 31.19 31.19 31.19 31.19 31.19 31.19 31.19 31.19 31.19
Non core revenues
1,38
4.75
1,38
4.75
1,384.7
5
1,384.7
5
1,384.7
5
1,384.7
5
1,384.7
5
1,384.7
5
1,384.7
5
1,384.7
5
1,384.7
5 1,384.75
Main government
budget allocation
20,8
33.3
3
20,8
33.3
3
20,833.
33
20,833.
33
20,833.
33
20,833.
33
20,833.
33
20,833.
33
20,833.
33
20,833.
33
20,833.
33
20,833.3
3
Total revenue
22,2
18.8
7
22,2
18.8
7
22,218.
87
22,218.
87
22,218.
87
22,218.
87
22,218.
87
22,218.
87
22,218.
87
22,218.
87
22,218.
87
22,218.8
7
Operating
expenses
Consultant's
salaries
1,34
6.11
1,34
6.11
1,346.1
1
1,346.1
1
1,346.1
1
1,346.1
1
1,346.1
1
1,346.1
1
1,346.1
1
1,346.1
1
1,346.1
1 1,346.11
General practioners
salaries 1,08 1,08 1,081.2 1,081.2 1,081.2 1,081.2 1,081.2 1,081.2 1,081.2 1,081.2 1,081.2 1,081.22

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1.22 1.22 2 2 2 2 2 2 2 2 2
Nursing salaries
886.
60
886.
60 886.60 886.60 886.60 886.60 886.60 886.60 886.60 886.60 886.60 886.60
Receptionists 4.70 4.70 4.70 4.70 4.70 4.70 4.70 4.70 4.70 4.70 4.70 4.70
Pharmacists
salaries
1,01
6.35
1,01
6.35
1,016.3
5
1,016.3
5
1,016.3
5
1,016.3
5
1,016.3
5
1,016.3
5
1,016.3
5
1,016.3
5
1,016.3
5 1,016.35
Emergency room
service
1,26
8.84
1,26
8.84
1,268.8
4
1,268.8
4
1,268.8
4
1,268.8
4
1,268.8
4
1,268.8
4
1,268.8
4
1,268.8
4
1,268.8
4 1,268.84
IT Staff
785.
23
785.
23 785.23 785.23 785.23 785.23 785.23 785.23 785.23 785.23 785.23 785.23
Finance
Administrative
salaries
78.5
2
78.5
2 78.52 78.52 78.52 78.52 78.52 78.52 78.52 78.52 78.52 78.52
Imdemnity
insurance
11.1
9
11.1
9 11.19 11.19 11.19 11.19 11.19 11.19 11.19 11.19 11.19 11.19
Total operating
expenses
6,47
9.10
6,47
9.10
6,479.1
0
6,479.1
0
6,479.1
0
6,479.1
0
6,479.1
0
6,479.1
0
6,479.1
0
6,479.1
0
6,479.1
0 6,479.10
Supplies
Office and
administration
32.7
0
32.7
0 32.70 32.70 32.70 32.70 32.70 32.70 32.70 32.70 32.70 32.70
Operation rooms

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767.
19
767.
19 767.19 767.19 767.19 767.19 767.19 767.19 767.19 767.19 767.19 767.19
X-ray equipment
482.
20
482.
20 482.20 482.20 482.20 482.20 482.20 482.20 482.20 482.20 482.20 482.20
Pharmacy and
medicines
1,36
7.95
1,36
7.95
1,367.9
5
1,367.9
5
1,367.9
5
1,367.9
5
1,367.9
5
1,367.9
5
1,367.9
5
1,367.9
5
1,367.9
5 1,367.95
cleaning and linen
134.
93
134.
93 134.93 134.93 134.93 134.93 134.93 134.93 134.93 134.93 134.93 134.93
write off of
material
78.7
1
78.7
1 78.71 78.71 78.71 78.71 78.71 78.71 78.71 78.71 78.71 78.71
central salaries
68.1
8
68.1
8 68.18 68.18 68.18 68.18 68.18 68.18 68.18 68.18 68.18 68.18
Utilities-electricity
and communication
6,47
6.48
6,47
6.48
6,476.4
8
6,476.4
8
6,476.4
8
6,476.4
8
6,476.4
8
6,476.4
8
6,476.4
8
6,476.4
8
6,476.4
8 6,476.48
Total supplies
expenses
9,40
8.18
9,40
8.18
9,408.1
8
9,408.1
8
9,408.1
8
9,408.1
8
9,408.1
8
9,408.1
8
9,408.1
8
9,408.1
8
9,408.1
8 9,408.18
Financing
Loan interest
104.
17
104.
17 104.17 104.17 104.17 104.17 104.17 104.17 104.17 104.17 104.17 104.17
overdraft interest 1.77 1.77 1.77 1.77 1.77 1.77 1.77 1.77 1.77 1.77 1.77 1.77
Total finance

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expense
105.
94
105.
94 105.94 105.94 105.94 105.94 105.94 105.94 105.94 105.94 105.94 105.94
Total expenses
15,9
93.2
1
15,9
93.2
1
15,993.
21
15,993.
21
15,993.
21
15,993.
21
15,993.
21
15,993.
21
15,993.
21
15,993.
21
15,993.
21
15,993.2
1
Surplus/Deficit
6,22
5.65
6,22
5.65
6,225.6
5
6,225.6
5
6,225.6
5
6,225.6
5
6,225.6
5
6,225.6
5
6,225.6
5
6,225.6
5
6,225.6
5 6,225.65
Balance Brought
forward
14,6
51.8
7
20,8
77.5
2
27,103.
18
2,078.8
3
8,304.4
9
14,530.
14
-
10,494.
20
-
4,268.5
5
1,957.1
1
-
23,067.
24
-
16,841.
58
-
10,615.9
3
Financial resources
available
20,8
77.5
2
27,1
03.1
8
33,328.
83
8,304.4
9
14,530.
14
20,755.
80
-
4,268.5
5
1,957.1
1
8,182.7
6
-
16,841.
58
-
10,615.
93
-
4,390.28
Capital budgetary
available
Infrastructural
requirements 0
31,250.
00
31,250.
00
31,250.
00
31,250.0
0
Financial
requirements
20,8
77.5
2
27,1
03.1
8
2,078.8
3
8,304.4
9
14,530.
14
-
10,494.
20
-
4,268.5
5
1,957.1
1
-
23,067.
24
-
16,841.
58
-
10,615.
93
-
35,640.2
8

11
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Part 3: Project Evaluation
Project A
Year
0 Year 1 Year 2 Year 3 Year 4 Year 5
Aggregate
outlay
Capital outlay -5,000,000 -5,000,000 -10,000,000
Government financing 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 15,000,000
Income from foreign
clients 850,000 890,000 1,000,000 1,000,000 870,000 4,610,000
wages and salaries -450,000 -480,000 -500,000 -525,000 -535,000 -2,490,000
Licensing fees -250,000 -250,000 -250,000 -250,000 -250,000 -1,250,000
Interest payments -6,500 -6,500 -6,500 -6,500 -6,500 -32,500
Repairs and
maintenance -125,000 -125,000 -125,000 -125,000 -125,000 -625,000
General overheads -25,000 -25,000 -25,000 -25,000 25,000 -75,000
0 -2,006,500 -1,996,500 3,093,500 3,068,500 2,978,500 5,137,500
NPV Discount Rate 2% 0.980392157 0.961168781
0.94232233
5
0.92384542
6 0.90573081
NPV -
-
1,967,156.86
-
1,918,973.47
2,915,074.1
4
2,834,819.6
9
2,697,719.2
2 4,561,483
IRR Discount Rate 41% 0.710834608 0.505285841
0.35917466
3
0.25531378
1
0.18148587
1
0
-
1,426,289.64
-
1,008,803.18
1,111,106.8
2 783,430.34 540,555.67 0