Ratio analysis. Swift Community Hospital, a 310-bed facility, is a sole provider hospital in a rural New England area serving a large market. Recently, a wealthy philanthropist made a major contribution to the hospital’s long-term investment fund. Assess Swift’s profitability, liquidity, activity, and capital structure ratios. Using the financial ratios from Exhibit 4.25 for the current and previous years, evaluate Swift’s financial condition, and also compare its ratios to national industry benchmarks for its bed size, using the data from Exhibits 4.16a.

Transcribed Image Text:

EXHIBIT 4.25 SELECTED FINANCIAL RATIOS FOR SWIFT COMMUNITY HOSPITAL Ratio 20X1 20X0 Liquidity ratios Current ratio 3.12 1.95 Quick ratio 2.12 1.45 Acid test ratio 0.89 0.25 Days in accounts receivable 46 58 Days cash on hand 148 48 Average payment period (days) 50 56 Profitability ratios Operating margin Nonoperating revenue Return on assets 0.02 0.01 0.35 0.05 0.15 0.04 Activity ratios Total asset turnover ratio 0.80 0.90 Fixed asset turnover ratio 1.90 2.10 Age of plant 12.92 11.04 Capital structure ratios Long-term debt to net assets 0.25 0.60 Net assets to total assets 0.65 0.35 Debt service coverage ratio 3.50 2.25