CHAPTER 17: FINANCIAL CONDITION ANALYSIS Calculate the following ratios based upon data The Heart Hospital financial statements. Homework Problem 5.1 RATIOS Heart Hospital Peer Group Average The Heart Hospital Statement of Income and Retained Earnings PROFITABILITY Year Ended December 31, 2020 Total Margin 15.0% (in thousands) Net patient service revenue $64,505 Operating Margin 16.0% Personnel expense $21,707 Medical supplies and drugs 15,047 Other operating expenses 9,721 Interest expense 1,322 Depreciation 2,625 ROA (return on assets) 22.5% Total operating expenses $50,422 Income from operations 14,083 Non-operating income $159 Net income $14,242 ROE (return on equity) 37.6% The Heart Hospital LIQUIDITY RATIOS Balance Sheet Year Ended December 31, 2020 Current Ratio 2.0 (in thousands) Cash and equivalents $14,202 Net patient accts receivable 5,918 Days Cash on Hand 85 Supplies inventory 1,211 Prepaid expenses and other current assets 1,429 Total current assets $22,760 Property and equipment $47,311 Debt Ratio 40.0% Less accumulated depreciation 13,542 Net property and equipment $33,769 Other assets $901 Total assets $57,430 Debt to Equity Ratio 0.67 Accounts payable $1,910 Accrued compensation and benefits 2,543 Other accrued liabilities 1,843 Times Interest Earned 5.0 Current portion of long-term debt 2,064 Total current liabilities $8,360 Long-term debt $21,640 Total liabilities $30,000 ASSET MANAGEMENT RATIOS Owners’ equity $27,430 Total liabilities & equity $57,430 Fixed Asset Turnover 1.4 Total Asset Turnover 1.50 Days in Patient AR 20.0 Average Age of Plant 11.5
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