Calculate and show the debt service coverage ratio ( p 379 or Excel file) for these two hospitals.

Which would be more likely to get a loan using debt financing? Why?

Which would be more likely to use equity financing? Why?

Hospital 1 Hospital 2

Current Liabilities $145,685,000 $224,790,000

Excess of Revenue over Expenses $33,000,000 $3,500,000

Depreciation and Amortization $4,010,101 $7,645,000

Annual Debt Service Payments $6,435,000 $13,000,000

Current Assets $184,500,000 $223,400,000

Interest $2,750,000 $4,125,000

Principal Payments $10,000,000 $15,000,000