Based on the material in the financial reports below for the HMO, fill in the yellow boxes (2 points each, 14 points total) and answer the questions below:

1. What is the value of profitability for ABC as compared to the Industry Averages? (15 points)
2. What can you tell in regard to the ROE in terms of industry averages? (15 points)
3. What assumptions can you make in regard to the liquidity ratios? (15 points)
4. What assumptions can you make in regard to the utilization of assets? (15 points)
5. Overall, how ABC doing as compared to the industry average?

(16 points)

Balance Sheet for ABC HMO:

Current Assets
Cash and Short-Term Investments	$17,879
Net accounts receivable	$7,894
Inventory	$ 0
Other Current Assets	$13,980
Total Current Assets	a)
Net Fixed Assets	$ 13,589
Long-Term Investments	$19,245
Goodwill and Other Intangibles	$ 4,300
Other Assets	$ 4,325
Total Assets	b)
Liabilities and Equity
Total current liabilities	$33,875
Long-Term debt	$31,982
Other Liabilities	$ 8,451
Equity	c)
Total Equity and Liabilities	d)
Income Statement Data
$179,875
Expenses
Depreciation & amortization	$ 2,140
Other operating expense	$163,889
Total operating expense	e)
Interest expense	$ 567
Net income before taxes	f)
Income tax	$ 5.432
Net Income After Tax	g)

ABC’s HMO’s Financial Ratio Analysis

Financial Ratio	ABC	Industry Average
Liquidity
Days in receivable	23	35
Days cash on hand	93	123
Capital Structure
Debt financing %%	74.5%	34.5%
Long-term debt to capital %	48.3%	43.5%
Cash flow to debt %	9.1%	14.3%
Activity
Fixed Asset Turnover	39.5	64.3
Total Asset Turnover	1.6	1.5
Profitability
ROE%	18.1%	16.2%
Total Margin	4.0%	4.2%