StudentShare solutions
Triangle menu

Financial analysis - Chang Dental Clinic - Case Study Example

Extract of sample
Financial analysis - Chang Dental Clinic

Chris Miller knew that he would obtain $190,000 from his personal saving and loans from friends but required $510,000 purchase price for the practice. Miller is in need of information on his likelihood of obtaining a bank loan. Miller does not have any experience in running his own business but has decided to run one because of the experience he has gained in the practice having worked for three different dental practices. It is recommendable for Chris Miller to use the past financial performance – financial ratios of Chang Dental Clinic as well as his financial forecasts to convince the bank to loan him the required funds to purchase the dental practice. The past financial performance of Chang Dental Clinic will be useful to the bank in determining the financial performance and the capacity of the clinic to repay its debts which will then help it to determine whether to loan Miller or not.
Past financial performance of Chang Dental Clinic
1. Financial ratios
Miller should use the past financial performance of the clinic to convince the bank to loan him the required funds to purchase the practice. Liquidity ratios show the financial performance of the firm and also show the healthy level of the firm. The reason as to why Miller should use the liquidity ratios for the clinic is because the loan will be repaid by the money that will be obtained from the clinic. The performance of the clinic will determine its ability to repay the loan once it is granted to Chris Miller who will be the proprietor and owner of the clinic. Some of the important financial ratios which Miller should present to the bank are as follows: Ratio 2005 2004 2003 Current ratio 0.8 0.7 0.7 Net profit margin 32.5% 31.2% 29.4% Debt Ratio 11.12% 12.23% 27.3% Acid test ratio 0.7 0.6 0.6 Return on assets 18.1% 15.5% 13.5% Return on equity 95.9% 88.7% 75.2% Current ratio and acid test ratio show the ability of a firm to pay for its short term liabilities. The short term assets of the clinic are able to pay for its short term liabilities since the financial ratio are more than 0.5. The debt ratio for the company has reduced significantly from 2003 to 2005. Debt ratio compares the total debt of a company to its total assets. The low and reduced percentage for the clinic indicate less risk for the clinic and that the clinic is heavily dependent on leverage and that the clinic has a stronger equity position. Increasing net profit margin or positive trend in net profit margin for Chang Dental Clinic is an indication if increased profitability. Return on assets illustrates how a firm’s management is using it assets in profit making. The increase in the return on assets for the clinic during the last three years means that the clinic has been efficient in making a profit from its assets. Return on equity indicates the profitability level of a company and measures how much the shareholders have earned for investing their money in the firm. Return on equity for the clinic has increased significantly for the previous years and indication that the clinic’s management was efficient in utilizing its equity base for better returns to its investors. Based on the above financial analysis, Chris Miller will be armed to the tooth with the enough information to convince the loans manager of his eligibility for financing. The financial performance of the clinic has been overwhelming, and this will make Miller qualify for bank financing. The following are some other key ratios which the loan manager will put in consideration before granting the loan to Miller: Ratio 2005 2004 2003 Fixed asset turnover 15.3 13.9 12.8 Total asset turnover 4.7 4.8 5.9 The significant increase in the fixed asset turnover ...Show more

Summary

This case is about Chris Miller who needs to operate his first dental clinic. The case is about the different ways through which Chris Miller can convince the bank to loan him the needed funds to purchase the dental practice from Stanley Chang. …
Author : mohrmaximilian
Financial analysis - Chang Dental Clinic essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the case study on your topic
"Financial analysis - Chang Dental Clinic"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Financial analysis case report
Lowe’s must focus on the increasing its product, price, place, promotion and people strategies to increase its revenues. In terms of briefly talking about the question, the research is focused on analyzing the difference between the Dupont performance of Lowe’s and Home Depot retail stores.
4 pages (1000 words) Case Study
Financial Reporting Case analysis
All the issues coming out of the case can be solved to a reasonable level, if not in totality, by principles put into place by international bodies like the International Financial Reporting Standards (IFRS), the Financial Accounting Standards Board (FASB) and the United States’ Securities and Exchange Commission (SEC).
4 pages (1000 words) Case Study
Financial analysis
The company has reported an increase in its annual profits from 2005 to 2007 yet it has had cash flow problems which has made the company to lack sufficient cash to pay for its obligations within the deadline. Investors are usually concerned with the overall strength of a company including the cash flows and profitability before they get to invest in the company and that is why companies should ensure positive cash flows.
5 pages (1250 words) Case Study
Qantas Financial Analysis
The company's wide range of services extends to catering, engineering and maintenance etc (Reuters). This paper provides an insightful analysis of the financial position and business risks of Qantas with the help of the information provided in the company's financial statements for the year ended 2006.
4 pages (1000 words) Case Study
Financial analysis Case Study
Further on, changes in profile and profitability ratios are explained with the help of the information found in notes to financial statements, statement of accounting policies, board members' reports, corporate governance issues, and press releases, one by one.
13 pages (3250 words) Case Study
Financial Performance Analysis
The Current Ratio for Marks and Spencer (M&S) was 1,142.1/2,017 = 0.57:1 in 2006 (1st April) as compared to 832.3/1,237.4 = 0.67:1 in 2005. For the interim period of April to September 2006, the current ratio was 1,025.4/1,971.6 = 0.52:1 as compared to 983.5/1426.9 = 0.689 on October 1st 2005.
6 pages (1500 words) Case Study
Cleveland Clinic
List a sentence or two of your management recommendations on how they could overcome the weaknesses. Cleveland Clinic's strengths are it's overall quality, physical comfort, and coordination of care. They have weaknesses in the areas of information and education, respect for patient's preferences, and involvement of family and friends.
5 pages (1250 words) Case Study
Financial Analysis
Miller is in need of information on his likelihood of obtaining a bank loan. Miller does not have any experience in running his own business but has decided to run
5 pages (1250 words) Case Study
Financial statement auditing analysis
Auditing is an art in itself in the sense that, numerous procedures that guides it operations in various procedures. The process of auditing seeks to ensure that the financial statements and other documents are complete, they really occurred, correctly classified, accurate
7 pages (1750 words) Case Study
Financial analysis
From the forecast on income statement made after the acquisition of Exterran Holdings Inc, the venture can be considered profitable. The estimate of growth in sales in financial year 2014 is 9%. This
2 pages (500 words) Case Study
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Click to create a comment