AMT: A Case Study of a Start-UP

It is necessary to use pro-forma financial statements to determine how much is needed by year-end 1988. The forecast using historical ratios provides an objective and quantifiable analysis. Based on these figures, the company will post a loss of $2.3 million, $3.8 million and $5.8 million for the years 1986, 1987 and 1988, respectively. In this case, the company will need an additional $11.9 million. Management, on the other hand, forecasts profits for each of these three years, but provides no data to explain how these forecasts are calculated.

Western National Bank would be ill-advised to loan the requested funds to AMT. Although the relationship with Biological Labs is close and strong, and the infusion of cash that the latter has provided has enabled AMT to continue to this point, AMT needs to bring its costs in line and reduce its reliance on short-term debt financing. Its i

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nts. In the prospective reimbursement system, hospitals are paid a fixed fee based on prospective rates for services rather than on actual costs. Those hospitals which are able to provide services at a lower cost than the prospective rate will make a profit; those which are unable to bring their costs to this level will see a loss. This gives hospitals, including HCA, considerable incentive to realign their programs with an emphasis on cost-cutting. Finance is important to HCA because it provides the funds necessary for the company to continue its acquisition strategy and to upgrade the equipment and services at existing facilities. By maintaining its single-A bond rating, for example, the company is able to borrow funds at lower interest rates than if the bond rating were lower. Having the bond rating lowered from single-A would affect the cost of funds for the company and would increase the amount required to service additional debt. Given that the regulatory environment is undergoing significant changes, and that the competitive environment itself is becoming more intense, the company should carefully consider whether it is willing to take on the additional cost that a lowered bond rating would represent at this time. H
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Some common words found in the essay are:
Traditionally HCA's, HCA HCA's, Avon Avon's, National Bank, Finance HCA, Gulf Socal, Labs AT&T, AT&T AT&T's, IBM Long-term, Gulf Investors, bond rating, debt ratio, prospective reimbursement, 60 percent, 21 percent, attractive acquisition targets, acquisition strategy, repurchase program, example company, 15 percent, takes account, single-a bond rating, western national bank,
Approximate Word count = 1693
Approximate Pages = 7 (250 words per page)