Case 4.1: East Pacific Hospital Key concept: Computing basic financial ratios for a not-for-profit hospital he East Pacific Hospital, a nonprofit entity, has been experiencing declining operat T ing revenues, and the CEO is concerned about future financial performance. The most recent summary operations statement and balance sheet are shown here: East Pacific Hospital Operations Statement for Year Ended December 31, 2015 Assets Revenues $96,000,000 Expenses 94,000,000 Operating income $2,000,000 East Pacific Hospital Balance Sheet December 31, 2015 and 2014 2015 2014 Current assets $21,000,000 $18,000,000 Property, plant, and equipment 64,000,000 63,000,000 Total assets $85,000,000 $81,000,000 Liabilities and net assets Liabilities Current liabilities $17,000,000 $14,000,000 Bonds payable 64,000,000 65,000,000 81,000,000 79,000,000 Total liabilities Net assets Unrestricted net assets 4,000,000 2,000,000 Total liabilities and net assets $85,000,000 $81,000,000 Assignments and Questions 1. Compute the total profit margin ratio for 2015. Is this good if the industry aver age is 2.5 percent? 2. Compute the return on assets ratio for 2015. Is this good if the industry average is 8.3 percent? 3. Compute the return on equity ratio for 2015. Is this good if the industry average is 5 percent? bns sids 4. What balance sheet account provides the link between the balance sheet and the operations statement?