Apria Healthcare Group, Inc. and Lincare Holdings, Inc
Two healthcare companies, Apria Healthcare Group, Inc. and Lincare Holdings, Inc. both provide home medical equipment and services throughout the United States and are listed in the Standard and Poor MidCap 400. In order to gage the financial performance of each of these companies, Team B will evaluate each company's financial performance over the past two years using various ratios. This will assist in analyzing trends and determining any significant differences in the two companies' financial performance. The team will identify cash used and generated, determine reasons for changes year over year, and evaluate if cash is generated in a sustainable manner. Based on this research, we will make appropriate recommendations on how the companies may better manage cash flows in the future.
Ratios defined
The following nine ratios will be used in evaluating the financial performance of both Apria Healthcare Group, Inc. (AHG) and Lincare Holdings, Inc. (LNCR). Both AHG and LNCR's percentage in ratios are provided for comparison:
1. Current Ratio is expressed as a percentage and shows the amount of current assets for each dollar of current liabilities. Porter and Norton (2005) state that many analysts use a rule of thumb of 2:1 as a sign of short term financial health for a company.
? AHG's current ratio decreased from 2.01 in 2005 to 1.69 2006. This drop of 15.85% could be a concern for short term financial health.
? LNCR's current ratio decreased substantially from 2.27 in 2005 to 1.28 in 2006, a drop of 43.69%. Short term financial health has dropped well below the rule of thumb of ...