Envision Healthcare and Air Methods Corporation: A Comparative Analysis of Capital Expenditures

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Annual reports are detailed statements of all the activities carried out by an entity throughout the year (Brealey & Myers, 2014). Firms are required to avail these reports to their stakeholders regardless of whether or not they are publicly listed (Byrd, Hickman & McPherson, 2013). In this paper, the author will assess the annual reports of two companies. The firms are Envision Healthcare Corporation and Air Methods Corp. The capital spending of each organization in the past three years will be analyzed. In addition, the author will compare the rate of spending between the two companies.

Air Methods Corp

Air Methods Corporation offers air medical transportation services to the general population (Air Methods Corp., 2015). In addition, the company fabricates and installs interiors for medical airplanes.

Air Methods’ Capital Spending for 2014

The company’s total free cash flow for the last three months of 2014 was $16 million. For the entire year, the figure was $27 million (Air Methods Corp., 2015). Net operating cash flow stood at $175.63 million. On its part, the net investing cash flow was $131.27 million. Net financing cash flow was $41.05 million. Total capital expenditure was $148.5 million (Ziegler & Wendy, 2014).

Air Methods’ Capital Spending for 2013

In the 2013 financial year, Air Methods Corporation’s net cash flow from operating activities was $149.65 million. Net investing cash flow was $175.09 million. Net financing cash flow was $31.49 million. Total capital expenditure was $129.92 million. In 2013, the company’s free cash flow stood at $26.39 million (Air Methods Corp., 2015).

Air Methods’ Capital Spending for 2012

In 2012, Air Methods Corporation had a net operating cash flow of $151.3 million (Zeller, Stanko & Han, 2012). With regards to investment activities, the company’s capital expenditure was $95.51 million. Total net investing cash flow was $110 million. Net financing cash flow was $41.04 million. Total free cash flow for the year stood at $58.61 million (Air Methods Corp., 2015).

Capital Spending: Analyzing the Trend

An analysis of the company’s annual reports for the three years reveals fluctuations in its capital spending. The figure dropped from $58.61 million in 2012 to $26.39 million in 2013. However, the spending saw a slight increase in 2014 where it stood at $27.13 million (Ziegler & Wendy, 2014).

The free flow for a given financial year is determined by adding operations cash flow to capital expenditure cash flow (Brealey & Myers, 2014). For example, expenditure the for 2014 financial year can be calculated as follows:

Free Cash Flow = operations cash flow + capital expenditure cash flow

= 175.629 + -148.504

Total = $27 million.

Air Methods Capital Expenditure

The company’s capital expenditure has increased in the past three years. In 2012, the figure was $95.51 million. In 2013, it rose to $129.92 million. In 2014, the expenditure stood at $148.5 million (Air Methods Corp., 2015). A number of factors impact on the firm’s debt capacity and capital structure. They include changes in interest rates, revenue, and amount of liquidity (Byrd et al., 2013).

Envision Healthcare Corporation

The company focuses on the provision of fafacility-basedutsourced physician and medical transportation services.

Capital Spending for 2014

In 2014, the company’s net cash flow from operating activities was $274 million. Net investing cash flow was $277 million. Total net cash flow from financing activities stood at $117 million. Free cash flow for the entire year was $196 million (Envision Healthcare Corp., 2015).

Capital Spending for 2013

In 2013, Envision Healthcare Corporation’s net cash flow from operating activities was $54 million. Net investing cash flow was $99 million. Net cash flow from investing activities totaled $191 million. During this trading period, the company registered a free cash flow of $-12 million (Envision Healthcare Corp., 2015).

Capital Spending for 2012

In 2012, Envision Healthcare Corporation’s net cash flow from operating activities was $216 million. Total net cash flow from financing operations was $139 million. Free cash flow for the entire year was $156 million (Zeller et al., 2012).

Capital Spending: Trend

An analysis of Envision’s annual reports shows an inconsistent capital spending pattern. In 2012, the amount spent was $156 million. In 2013, the figure dropped to $-12 million (Envision Healthcare Corp., 2015). The reason for this is that capital expenditure was more than operating cash flow. In 2014, the amount increased to $196 million.

The capital spending rate for 2014 is calculated as follows:

Capital spending rate=Cash flow from operations + cash flow from capital expenditures

=274.048+ -78.046

Total capital spending for 2014 = $196 million.

Capital Expenditure for Envision Healthcare Corporation

The company’s capital expenditure in the past three years has increased. In 2012, the figure was $60 million. In 2013, this rose to $66 million. In 2014, the expenditure was $78 million (Envision Healthcare Corp., 2015). A number of factors affected the company’s debt capacity and capital structure. They include fluctuations in interest rates, revenue, and liquidity (Byrd et al., 2013).

A Comparative Analysis of the Two Company’s Capital Spending

The level of spending in the two companies is high. However, Envision Healthcare Corporation’s capital expenditure is higher compared to that of Air Methods Company. The latter only spent more than Envision in 2013 (Air Methods Corp., 2015). The differences exist due to variations between the two entities’ financing, investing, and operating activities (Byrd et al., 2013).

Conclusion

Annual reports help stakeholders to understand the performance of a company. In addition, they enable managers and shareholders to identify the components that use more resources than others in a given trading period.

References

Air Methods Corp. (2015). Web.

Brealey, R., & Myers, S. (2014). Principles of corporate finance (11th ed.). New York: McGraw-Hill Irwin.

Byrd, J., Hickman, K., & McPherson, M. (2013). Managerial finance. San Diego, CA: Bridgepoint Education.

Envision Healthcare Corp. (2015). Web.

Zeller, T., Stanko, B., & Han, J. (2012). Investigating presentational change in company annual reports: An extension. Academy of Accounting and Financial Studies Journal, 16(3), 1-12.

Ziegler, J., & Wendy, R. (2014). Annual reports 2013-2014. California Society of Certified Public Accountants, 83(2), 18-37.

Click Here To Order Now!