Healthcare post merger analysis Essay Example | Topics and Well Written Essays - 1500 words

Healthcargon moorage merger analysis - Essay Example integrating in this manufacturing is essential for its sustainable growth in the long run and to meet the uphill challenges in the industry in terms of huge enthronization and infrastructural facilities needed to cope up with the change magnitude demand in the society for healthcare services. Evaluation of monetary performance Study by Healy, Palepu & Ruback (1990) plant that The results indicate that merged firms have significant improvements in asset productivity relative to their industries after the merger, trail to higher post-merger operating cash flow returns. The criteria for evaluating financial performance of the governing bodys post-merger are multifarious depending upon the reference of organization and its objectives. However, in a typical company running on profit basis, return on investment post merger is an meaning(a) criterion for evaluation of financial performance from the shareholders point of view. Th ere are mergers also taking place between for profit and not for profit organizations. Financial and operating ratios as performance measures are adopted by the organizations for industry equality as well as comparison with the historical performance. Of which, the following are the important ratios used for measuring performance in term of profitability. restitution on assets Net Income / Total Assets Return on equity Net Income / Shareholders equity Return on capital employed Earnings Before Interest and Tax (EBIT)/(Equity + Debt) Similarly, Earnings per Share (EPS), liquidity ratios, change flow ratios can be calculated for analysis and comparison. Budgetary analysis as a cocksucker for evaluation will be effective as it reveals variances. This will enable the management to compare essential with the budgeted performance for exploring the reasons for variances and take corrective actions wherever necessary. Kumar (2012) stated Between 1985 and 2007, 51 large companies in the industry consolidated into only 10 organizations they are effective methods of cutting costs. Reduction in repress of employees post merger, legal expenses, management cost and marketing costs are some of the areas where cost cutting is executable in the merged entity. Determinants of financial results post-merger It is important to determine whether or not the merger generated favourable financial results for the organization post merger. Section of Antitrust Law (2003, p.7-8) states The size of the geographic will determine the number of competitors in the market, their market shares, and the likelihood of anticompetitive effects. Geographic definition issues have determined the outcome of the majority of hospital merger decisions. Apart from improvements in operational performance due to synergies created in merger and environmental factors, it is important to note that the method of accounting, for example, purchase or acquisition method adopted for merger or type of fina ncing (equity or debt) the merger has significant impact on the results of the merged organization from investment angle. Therefore, instead of profitability ratios, adopting pretax cash flows and increase or decrease thereof,