Hospital Corporation Of America

Essay specific features

 

Issue:

Business

 

Written by:

Barbara S

 

Date added:

August 23, 2015

 

Level:

University

 

Grade:

A

 

No of pages / words:

2 / 511

 

Was viewed:

5946 times

 

Rating of current essay:

 
Essay content:

While some investors welcome HCA’s more aggressive use of leverage, others are worried that HCA’s capital structure could decrease the company’s current A bond rating. As a result of increased debt, a decline in HCA’s first-quarter earnings per share could occur. The company faces the problem of deciding what should be done to its capital structure and whether reducing the ratio of debt to total capital to match the target ratio would lead to improved performance...
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An important goal of HCA was to maintain a 60% target ratio of debt to total capital for the leverage expectation of an A bond rating. However, at its current state, HCA has a ratio of debt to total capital at 68.8%, which will reduce the firm’s A bond rate. This higher ratio of debt to total capital shows investors that HCA is more prone to using debt financing and shows weak financial strength with the possibility of increased default risk...
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