Final Project Essay Example | Topics and Well Written Essays - 750 words - 2

Final Project - Essay Example MCD has been steadily increasing its debt-equity ratio from the year 2007 through 2012. The following table represents the debt-equity ratio of the company for last 5 years. Year Dec. 2007 Dec. 2008 Dec. 2009 Dec. 2010 Dec. 2011 Debt-equity ratio, Source: ycharts.com 06087 0.7635 0.7538 0.8386 0.8687 EPS, Source: Nasdaq.com 1.98 3.76 4.11 4.58 5.27 Price per share, source: Key statistics 57.05 63.75 62.44 76.76 100.33 P/E, (by calculation) 30.22 16.42 15.47 16.75 19.03 It can be seen from the above table that as debt-equity ratio rises, earnings per share of the company also rises and so the market price per share of the company. Does this mean that the company should go on increasing debt to increase its earnings and thereby shareholder’s wealth? In fact, the trade-off theory ascertains that the optimal debt-equity ratio is 2:1(Optimal Capital Structure, 2012). In the same industry, the company such as AFC Industries has been found to have debt-equity ratio as high as 2.62 as on August, 2012 (Industry debt-equity ratio). High amount of debt is good during booming period but equally risky during downslide when revenues fall exponentially and the company may find difficult to pay interest towards its debt. That is the reason high leveraging is considered risky during recessionary period, however, in case of MCD, there is considerable scope to increase its debt-equity ratio to expand its business. MCD’s Cost of Capital can be given using Capital Asset Pricing Model (CAPM) K = RF + b (KM - RF), where K is the cost of capital, RF denotes the risk-free return, b (beta) is the systematic risk of a stock relative to the market or index such as S&P. (KM - RF), denotes about the equity risk premium that market would like to earn over risk-free return in the long run (Capital Asset Pricing Model (CAPM), 2012). Currently, risk free return RF can be taken as 1.5% which can be earned by investing in the long term treasury bonds. Beta b is measured as = 0.31 (y ahoo.com) (KM - RF) can be taken as 7 percent that anybody would like to earn over and above risk free return. Thus, the cost of capital = 1.5 + 0.31 (7.0) = 3.67% Higher debt-equity ratio would make more funds available to the company for business without raising any extra equity. Currently, the shareholder's equity is $14.04B and long term debt is $13.57B (as per data from second quarter 2012). This means that the company is operating at the debt-equity ratio of 13.75/14.04 = 0.98 When company operates at 2:1 (debt-equity) ratio means the company would have total debt available to them $28.08B. That means the company would have extra $14.25B funds available that can be deployed in the asset formation or expansion of the business without raising any extra capital from the shareholders. It is assumed that this extra capital adds to the business and thereby EPS of the company in the same proportion (while all other things remaining the same, of course!). Thus, extrapolating current E PS of 5.32 One can derive new EPS as 5.32 ? (3/1.98) = 8 Assuming the same P/E ratio of 19 that MCD had during the year 2011, we have New Market Price/share of the company, P = 19 ? 8 = 152 New Market Capitalization or Market Value = Number of shares ? market price/ share = 16,600 ? 152 = $38.35B Dividend Policy The company is in fast-food business and runs a large chain of

Patient Classification System Essay Example | Topics and Well Written Essays - 3750 words

Patient Classification System - Essay Example This perception distinguishes important patient characteristics and helps in staffing procedures for fairness in patient staffing and enhancing excellence of care and performance. Information acquired with the use of the PCS can be used by nurse leaders to efficiently and impartially lobby for proper patient care resources (Harper, et al. 2007). To get the required care that is adequate to their uneven patterns of acuity, patients repeatedly shifted a number of times throughout their small of stay in hospital. Because of these shifting, patients some times miss or get their treatment delayed which in turn cause medication errors, patients falling, and personal contact with several caregivers or related health experts. This cause an enlarged workload index, responsibilities and physical movement, which is innate in existing nursing care models and it attach no worth to patients’ care outcomes. The majority of tools for gauging acuity do not reflect on the effects of repeated shifting of patients on healthcare centers or nursing units. However, the estimate of slanted procedures for patients’ acuity, transformed to a workload index, is the process the majority nursing division resources and plans the number of nursing hours per patient day. Present day’s customary nursing unit might move or discharge an astounding 40% to 70% of its patients each day. A rational workload index is a vital evaluator of withholding of nurses; therefore, it is a main area of prospect as it is linked to the flow of patients and the progress of innovative nursing care models. Throughout the last decade, the difference between critical care and medical-surgical care units was uncertain with a rising acuity of patients, ensuing in the development of progressive care units. Patients are admitted to progressive care units as the patients need immediate mechanical aeration, infusions of vasopressors, or physiological