Question

In: Finance

You have been the practice manager of Rockford Urgent Care for five years. The practice is...

You have been the practice manager of Rockford Urgent Care for five years. The practice is profitable, but the current physician owner is ready to retire, and sell the practice. He has hired a company to broker the sale. Respond to the following points:

What information should you begin preparing to aid in a smooth valuation process?

Explain the relationship of a practice's income to valuation.
Explain how your ability to collect from patients will impact a favorable valuation.

Solutions

Expert Solution

1. Information which is required in preparing the smooth valuation process is related to to overall receipt of the company along with the overall cash flow generation ability of the company and overall expenses of the company and we will also be looking at the the debt of the company and the overall rate of return which is generated by the company and we will be also looking at the current assets and current liabilities of the companies.

it can be done through discounted cash flows method if we are undertaking the cash flows or it can also be done through profitability methods.

2.when there will be a higher income there is a higher valuation which will be earned, and hence it can be said that there is a direct relationship between the income and the valuation of the company

3. when there will be the higher ability to collect,it will mean that the company will have a higher cash collection cycle and the company will be having a higher liquidity upon its hands and it would be increasing the overall liquidity of the company and the current assets of the company and the cash position of the company which will help it in attracting high valuation.

jeff jeffy answered 1 year ago
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