Assignment Exercise 111: Liquidity Ratios Refer to the Metropolis Health System (MHS) case study in Chapter 28

Required:

1. Set up a worksheet for the liquidity ratios.

2. Compute the four liquidity ratios using the Chapter 28 MHS financial statements

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Metropolis Health System Statement of Cash Flows for the Year Ended March 31, 2 Statement of Cash Flows Operating Activities $1,700,000 Income from operations Adjustments to reconcile income from operations to net cash flows from operating activities Depreciation and amortization 1,950,000 Changes in asset and liability accounts Patient accounts receivable Other receivables Inventories Prepaid expenses and other assets Accounts payable and accrued expenses Reduction of bond interest payable Estimated third-party payer settlements 250,000 (50,000) (50,000) (50,000) (400,000) (25,000) (75,000) 80,000 20,000 Interest income received Unrestricted gifts and memorials received Net cash flow from operating activities $3,350,000 Cash Flows from Capital and Related Financing Activities Repayment of long-term obligations (500,000) Cash Flows from Investing Activities Purchase of assets whose use is limited (100,000) Equipment purchases and building improvements Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year (2,000,000) $750,000 400,000 $1,150,000