15. Ratio analysis. Exhibit 4.21 lists the financial ratios for 189-bed Collingswood Community Hospital. Assess the revenue, expense, and profitability: liquidity: activity, and capital structure of Collingswood for 20X1. Explain why these financial measures changed between 20X0 and 20x1, and compare them to national industry benchmarks for Colling- swood's bed size, using the data from Exhibit 4.16a. EXHIBIT 4.21 SELECTED FINANCIAL RATIOS FOR COLLINGSWOOD COMMUNITY HOSPITAL Ratio 20X1 20x0 3.05 0.65 48 215 62 2.01 0.35 60 120 48 $7.200 $6,934 43% $8,000 $7.300 50% 0.04 Liquidity ratios Current ratio Acid test ratio Days in accounts receivable Days cash on hand Average payment period (days) Revenue, expense, and profitability ratios 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 net assets Activity ratios Total asset turnover ratio Fixed asset turnover ratio Age of plant Capital structure ratios Debt service coverage ratio Long-term debt to net assets (equity) Net assets to total assets 0.15 0.13 0.08 0.04 0.04 0.90 2.20 8.45 1.20 2.75 11.15 2.75 1.40 0.42 4.00 0.55 0.65 EXHIBIT 4.16a FINANCIAL RATIOS FOR ALL U.S. HOSPITALS BY BED SIZE Optum & CMS Ratio Median Ratio Hospital Industry 1-99 Beds 200-299 300-399 Desired Liquidity ratios 100-199 Beds Beds Beds 400 Beds Position Current ratio Quick ratio 2.11 2.18 2.04 1.89 184 Acid test ratio 1.52 Above 165 1.39 127 150 Above 0.30 Days in accounts receivable 035 0.18 0.20 0220 0.38 49 Above 47 Days cash on hand 45 44 Below 86 85 Average payment period, days 81 102 76 119 Above 50 45 51 56 99 52 Below Revenue, expense, and profitability ratios Operating revenue per adjusted discharge $7448 $7.086 $6,407 $6.766 $7.121 57,517 Operating expense per adjusted discharge Above 57.197 56,094 56,112 56.260 56.819 57.399 Below Salary and benefit expense as a percentage 40% 40% 3894 38% 38% 38% Below of operating expense Operating margin 0.03 002 0.03 0.04 004 0.04 Above Nonoperating revenue 0.04 0.05 0.03 0.05 0.07 0.17 Varies Return on total assets 0.04 0.04 0.04 0.04 0.05 0.05 Above Return on net assets 0.08 0.08 0.08 0.09 0.10 0.09 Above Activity ratios Total asset turnover ratio 1.07 1.19 1.03 0.99 1.03 1.05 Above Net fixed assets turnover ratio 2.12 2.17 2.03 2.11 2.04 221 Above Age of plant ratio 10.31 1041 10.12 11.97 10.93 11.19 Below Capital structure ratios Long-term debt to net assets ratio 0.21 0.18 0.31 0.42 0.38 0.59 Below Net assets to total assets ratio 054 0.58 0.51 0.47 0.52 0.48 Above Times interest earned ratio 3.78 3.47 3.43 3.64 4.43 5.13 Above Debt service coverage ratio 3.18 3.51 3.63 3.50 6.36 4.24 Above All ratio wale except for quick acid test, and salary and benefit expense as a percentage of operating expense rates were obtained from Optum insight 2015 Almonaco Hotel ingang Operating indicators. 2011/2010 median value data. The quick acid test and salary and benefit expenses a percentage of operating expense ratios were obtained from 2010 CMS cost report orta These are true up to a certain point For example, in general the higher the better for the current ratio but after a certain point, the organisation might be better of testing some of the excess cash 15. Ratio analysis. Exhibit 4.21 lists the financial ratios for 189-bed Collingswood Community Hospital. Assess the revenue, expense, and profitability: liquidity: activity, and capital structure of Collingswood for 20X1. Explain why these financial measures changed between 20X0 and 20x1, and compare them to national industry benchmarks for Colling- swood's bed size, using the data from Exhibit 4.16a. EXHIBIT 4.21 SELECTED FINANCIAL RATIOS FOR COLLINGSWOOD COMMUNITY HOSPITAL Ratio 20X1 20x0 3.05 0.65 48 215 62 2.01 0.35 60 120 48 $7.200 $6,934 43% $8,000 $7.300 50% 0.04 Liquidity ratios Current ratio Acid test ratio Days in accounts receivable Days cash on hand Average payment period (days) Revenue, expense, and profitability ratios 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 net assets Activity ratios Total asset turnover ratio Fixed asset turnover ratio Age of plant Capital structure ratios Debt service coverage ratio Long-term debt to net assets (equity) Net assets to total assets 0.15 0.13 0.08 0.04 0.04 0.90 2.20 8.45 1.20 2.75 11.15 2.75 1.40 0.42 4.00 0.55 0.65 EXHIBIT 4.16a FINANCIAL RATIOS FOR ALL U.S. HOSPITALS BY BED SIZE Optum & CMS Ratio Median Ratio Hospital Industry 1-99 Beds 200-299 300-399 Desired Liquidity ratios 100-199 Beds Beds Beds 400 Beds Position Current ratio Quick ratio 2.11 2.18 2.04 1.89 184 Acid test ratio 1.52 Above 165 1.39 127 150 Above 0.30 Days in accounts receivable 035 0.18 0.20 0220 0.38 49 Above 47 Days cash on hand 45 44 Below 86 85 Average payment period, days 81 102 76 119 Above 50 45 51 56 99 52 Below Revenue, expense, and profitability ratios Operating revenue per adjusted discharge $7448 $7.086 $6,407 $6.766 $7.121 57,517 Operating expense per adjusted discharge Above 57.197 56,094 56,112 56.260 56.819 57.399 Below Salary and benefit expense as a percentage 40% 40% 3894 38% 38% 38% Below of operating expense Operating margin 0.03 002 0.03 0.04 004 0.04 Above Nonoperating revenue 0.04 0.05 0.03 0.05 0.07 0.17 Varies Return on total assets 0.04 0.04 0.04 0.04 0.05 0.05 Above Return on net assets 0.08 0.08 0.08 0.09 0.10 0.09 Above Activity ratios Total asset turnover ratio 1.07 1.19 1.03 0.99 1.03 1.05 Above Net fixed assets turnover ratio 2.12 2.17 2.03 2.11 2.04 221 Above Age of plant ratio 10.31 1041 10.12 11.97 10.93 11.19 Below Capital structure ratios Long-term debt to net assets ratio 0.21 0.18 0.31 0.42 0.38 0.59 Below Net assets to total assets ratio 054 0.58 0.51 0.47 0.52 0.48 Above Times interest earned ratio 3.78 3.47 3.43 3.64 4.43 5.13 Above Debt service coverage ratio 3.18 3.51 3.63 3.50 6.36 4.24 Above All ratio wale except for quick acid test, and salary and benefit expense as a percentage of operating expense rates were obtained from Optum insight 2015 Almonaco Hotel ingang Operating indicators. 2011/2010 median value data. The quick acid test and salary and benefit expenses a percentage of operating expense ratios were obtained from 2010 CMS cost report orta These are true up to a certain point For example, in general the higher the better for the current ratio but after a certain point, the organisation might be better of testing some of the excess cash