Chapter 17: Financial Condition Analy 17.8 Refer to the financial statements for The Heart Hospital in Problem 17.7. Prepare a common size balance sheet (where each account is expressed as a percentage of total assets) and a common size income statement (where each account is expressed as a percentage of total revenues). What do the common size balance sheet and income statement reveal about The Heart Hospital? (Hint: Common size analysis is illustrated in the supplement to this chapter) ent financial statements for The Heart Hospital are provided 17.7 Recent below: The Heart Hospital, Balance Sheet, September 30, 2015 (in thousands) Current assets: Cash Accounts receivable, net Medical supplies inventory Prepaid expenses and other current $14,202 5,918 1,211 1,429 $22,760 assets Total current assets Property, plant, and equipment, net $33,769 Other assets Total assets Current liabilities: Accounts payable Accrued compensation and benefits Other accrued liabilities 901 $57 430 s 1,910 2,543 1,843 Current portion of long-term debt 2064 8,360 21,640 Total current liabilities Long-term debt Total liabilities Owners' equity $30,000 $27,430 Total liabilities and owners' equity55.130 es and 676 Healthcare Finance The Heart Hospital, Statement of Year Ended September 30, 2015 (in thousand discounts and allowances Patient service revenue net of $66,962 Provision for bad debt Net patient service revenue (- 2457) 4,505 Operating expenses Personnel expense Medical supplies expense Other operating expenses Depreciation expense Total operating expenses Income from operations Other income (expenses): Interest expense Interest and other income, net Total other income (expenses), net Net income $21,707 15,047 9,721 2,625 S49,100 $15,405 ($ 1,322) 159 (S 1,163) $14,242 a. Perform a Du Pont analysis on The Heart Hospital Assume the the industry average ratios are as follows Total margin Total asset turnover Equity multiplier Return on equity (ROE) 15.0% 1.5 1.67 37.6% b. Calculate and interpret the following ratios for The Hcar Hospital Return on assets (ROA) Current ratio Days cash on hand Average collection period Debt ratio Debt-to-equity ratio Times interest earned (TIE) ratio Fixed asset turnover ratio Industry Averags 22.5% 2.0 85 days 20 days 40% 0.67 5.0