Ratio analysis. Radnor Healthcare System, an 800-bed institution, is located in a highly competitive, urban market area. Using the financial ratios from Exhibit 4.22 for the current and previous years, evaluate Radnor’s financial condition, focusing on revenue, expense, and profitability; liquidity; activity; and capital structure ratios, and compare them to national industry benchmarks for Radnor’s bed size, using the data from Exhibit 4.16a.

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EXHIBIT 4.22 SELECTED FINANCIAL RATIOS FOR RADNOR HEALTHCARE SYSTEM Ratio Liquidity ratios Current ratio Quick ratio Acid test ratio Days in accounts receivable Days cash on hand Average payment period (days) Revenue, expense, and profitability ratios 20X1 20X0 1.85 2.10 1.50 1.55 0.43 0.45 70 55 155 145 60 55 Operating revenue per adjusted discharge Operating expense per adjusted discharge Salary and benefit expense as a percentage of total operating expense Operating margin Nonoperating revenue Return on assets $12,500 $11,000 $12,800 $10,500 55% 50% (0.05) 0.02 0.06 0.07 0.02 0.06 Activity ratios Total asset turnover ratio 1.12 0.99 Fixed asset turnover ratio 2.55 2.35 Age of plant 11.75 11.03 Capital structure ratios Long-term debt to equity 0.45 0.56 Equity to total assets 0.55 0.71 Debt service coverage ratio 2.85 3.05