By how much would the 2017 ROE change from each of these strategies that you proposed?

For this homework, first read Case 24 in the ‘Cases’ textbook (pages 159-168). This case involves financial statement analysis of a 210 bed hospital. The Board chair has asked you to develop some strategies to improve profitability and estimate the impact of your strategies on the hospital’s ROE.
1. By how much would the 2017 ROE change from each of these strategies that you proposed?
a. Vacant land is sold and total assets decreases by $2.0 million. Net income would not be affected and the Board wants to maintain the 2017 debt ratio.
b. Debt is substituted for equity and the debt ratio increases to 48 percent. Total assets would not be affected. Interest expense would increase but better cost controls would offset the higher interest expense and thus net income would not change.
c. LEAN management is implemented and total expenses decrease by $0.5 million. Total revenue, total assets, and total liabilities & net assets would not change.
d. Whatever strategy Melissa chooses, she is under pressure from the Board to increase return on equity to at least 10 percent. What total margin would be needed to achieve the 10% ROE, holding everything else constant?
2. Based on the limited amount of information provided in the case, what are your top three or four recommendations to the Board?
Please see attached the accompanying student spreadsheet.
Attach your complete analysis in the spreadsheet and copy and paste

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