Compute the financial ratios for the hospital industry and analyze Northside Hospitals data. Then, choose three ratio categories and in two to three sentences for each category, explain how Northside Hospitals performance compares to its industry.

Balance Sheet for Hospital Industry 2016 Change $mn Assets Cash & Marketable Securities Accounts Receivable Inventories 2015 $mn 200,000 600,000 800,000 % of Total 5.6% 16.7% 22.2% Change 25.0% 50.0% 0.0% 250,000 900,000 800,000 % of Total 6.3% 22.5% 20.0% Change 20.0% 22.2% 25.0% 2017 $mn 300,000 1,100,000 1,000,000 % of Total 6.8% 25.0% 22.7% Total Current Assets 1,600,000 44.4% 21.9% 1,950,000 48.8% 23.1% 2,400,000 54.5% Gross plant and equipment Less: accumulated depreciation Net plant and equipment Land Total Fixed Assets 2,000,000 500.000 1,500,000 500,000 2,000,000 55.6% 13.9% 41.7% 13.9% 55.6% 10.0% 30.0% 3.3% 0.0% 2.5% 2,200,000 650,000 1,550,000 500,000 2,050,000 55.0% 16.3% 38.8% 12.5% 51.3% 13.6% 53.8% -3.2% 0.0% -2.4% 2,500,000 1,000,000 1,500,000 500,000 2,000,000 56.8% 22.7% 34.1% 11.4% 45.5% 3,600,000 225.0% 11.1% 4,000,000 222.5% 10.0% 4,400,000 225.0% Total Assets Liabilities Accounts Payable Notes Payable Accrued Liabilities Total Current Liabilities 450,000 500,000 500,000 500,000 580,000 500,000 12.5% 13.9% 0.0% 26.4% 11.1% 0.0% 0.0% 5.3% 12.5% 12.5% 0.0% 25.0% 16.0% 0.0% 0.0% 8.0% 13.2% 11.4% 0.0% 24.5% 950,000 1,000,000 1,080,000 150,000 4.2% 200,000 320,000 Long-term Debt Other Liabilities 33.3% 0.0% 9.1% 5.0% 0.0% 30.0% 60.0% 0.0% 16.7% 7.3% 0.0% 31.8% Total Liabilities 1,100,000 30.6% 1,200,000 1,400,000 2,500,000 2,800,000 3,000,000 Common Stock Pald in Capital Retained Earning 69.4% 0.0% 0.0% 12.0% 0.0% 0.0% 70.0% 0.0% 0.0% 7.1% 0.0% 0.0% 68.2% 0.0% 0.0% Total Shareholders Equity 2,500,000 69.4% 12.0% 2,800,000 70.0% 7.1% 3,000,000 68.2% Total Liabilities & Equity 3,600,000 100.0% 11.1% 4,000,000 100.0% 10.0% 4,400,000 100.0% Income Statement for Hospital Industry 2016 Change Revenue Cost of goods sold 2015 $ 9,000,000 6,000,000 3,000,000 100.0% 66.7% 33.3% Change 11.1% 8.3% 16.7% $ 10,000,000 6,500,000 3,500,000 % 100.0% 65.0% 35.0% Change 10.0% 7.7% 14.3% 2017 $ 11,000,000 7,000,000 4,000,000 % 100.0%|| 63.6% 36.4% Gross Profit General and Administrative Selling and Marketing Depreciation Operating Income 1,300,000 700,000 360,000 640,000 14.4% 7.8% 4.0% 7.1% 3.8% 14.3% 11.1% 48.4% 1,350,000 800,000 400,000 950,000 13.5% 8.096 4.0% 9.5% 5.9% 10.0%) 10.0% 31.6% 1,430,000 880,000 440,000 1,250,000 13.0% 8.0% 4.0% 11.4% Interest Expenses 140,000 1.6% 150,000 150,000 0.0% 7.1% 0.0% 60.0% 1.5% 0.0% 8.0% 0.0% 0.0% 37.5% 1.491 0.0% 10.0% Income before taxes 500,000 5.6% 800,000 1,100,000 Income Tax 200,000 2.2% 60.0% 320,000 3.2% 37.5% 440,000 4.0% Net Income 300,000 3.3% 60.0% 480,000 4.8% 37.5% 660,000 6.0% RATIOS 2015 2016 2017 1) Liquidity Ratio: a) Current Ratio: Industry Northside Hospital 1.68 1.63 2.22 1.76 2.00 b) Quick Ratio: Industry Northside Hospital 0.84 0.77 1.15 1.00 0.88 c) Average Payment Period: Industry Northside Hospital 28.1 63.3 30.2 63.3 days 62.6 2) Asset Management Ratios a) Total Assets Turnover: Industry Northside Hospital 2.50 1.53 2.50 1.50 1.40 b) Fixed Asset Turnover: Industry Northside Hospital 3.60 6.45 4.00 7.33 3.50 days c) Average Collection Period: Industry Northside Hospital 24.33 37.85 48.67 36.50 52.14 d) Inventory Turnover Ratio: Industry Northside Hospital 7.50 4.23 8.13 3.75 times 3.60 3) Financial Leverage Ratios a) Total Debt to Total Assets: Industry Northside Hospital 30.0% 50.0% 31.8% 56.4% 46.6% b) Equity Multiplier: Industry Northside Hospital 1.44 1.87 1.43 2.00 1.47 2.29 c) Interest Coverage: Industry Northside Hospital 4.57 6.71 6.33 6.00 5.29 d) Fixed Charge Coverage: Industry Northside Hospital 6.33 6.00 8.33 5.29 6.71 4) Profitability Ratio a) Operating Profit Margin: Industry Northside Hospital 7.11% 8.70% 11.36% 10.57% 10.00% b) Net Profit Margin: Industry Northside Hospital 3.33% 4.44% 4.80% 5.00% 5.14% c) Operating Return on Assets: Industry Northside Hospital 23.8% 15.0% 28.4% 14.8% 13.4% d) Return on Total Assets: Industry Northside Hospital 8.3% 6.8% 12.0% 7.5% 7.2% e) Return on Equity: Industry Northside Hospital 17.1% 15.0% 22.0% 16.5% 12.8% Ratio Comparison Example: The liquidity ratio shows that Northside Hospital is more liquid than its industry and thus is better able to pay its short-term debt. Ratio Comparison 1: Ratio Comparison 2: Ratio Comparison 3: Balance Sheet for Hospital Industry 2016 Change $mn Assets Cash & Marketable Securities Accounts Receivable Inventories 2015 $mn 200,000 600,000 800,000 % of Total 5.6% 16.7% 22.2% Change 25.0% 50.0% 0.0% 250,000 900,000 800,000 % of Total 6.3% 22.5% 20.0% Change 20.0% 22.2% 25.0% 2017 $mn 300,000 1,100,000 1,000,000 % of Total 6.8% 25.0% 22.7% Total Current Assets 1,600,000 44.4% 21.9% 1,950,000 48.8% 23.1% 2,400,000 54.5% Gross plant and equipment Less: accumulated depreciation Net plant and equipment Land Total Fixed Assets 2,000,000 500.000 1,500,000 500,000 2,000,000 55.6% 13.9% 41.7% 13.9% 55.6% 10.0% 30.0% 3.3% 0.0% 2.5% 2,200,000 650,000 1,550,000 500,000 2,050,000 55.0% 16.3% 38.8% 12.5% 51.3% 13.6% 53.8% -3.2% 0.0% -2.4% 2,500,000 1,000,000 1,500,000 500,000 2,000,000 56.8% 22.7% 34.1% 11.4% 45.5% 3,600,000 225.0% 11.1% 4,000,000 222.5% 10.0% 4,400,000 225.0% Total Assets Liabilities Accounts Payable Notes Payable Accrued Liabilities Total Current Liabilities 450,000 500,000 500,000 500,000 580,000 500,000 12.5% 13.9% 0.0% 26.4% 11.1% 0.0% 0.0% 5.3% 12.5% 12.5% 0.0% 25.0% 16.0% 0.0% 0.0% 8.0% 13.2% 11.4% 0.0% 24.5% 950,000 1,000,000 1,080,000 150,000 4.2% 200,000 320,000 Long-term Debt Other Liabilities 33.3% 0.0% 9.1% 5.0% 0.0% 30.0% 60.0% 0.0% 16.7% 7.3% 0.0% 31.8% Total Liabilities 1,100,000 30.6% 1,200,000 1,400,000 2,500,000 2,800,000 3,000,000 Common Stock Pald in Capital Retained Earning 69.4% 0.0% 0.0% 12.0% 0.0% 0.0% 70.0% 0.0% 0.0% 7.1% 0.0% 0.0% 68.2% 0.0% 0.0% Total Shareholders Equity 2,500,000 69.4% 12.0% 2,800,000 70.0% 7.1% 3,000,000 68.2% Total Liabilities & Equity 3,600,000 100.0% 11.1% 4,000,000 100.0% 10.0% 4,400,000 100.0% Income Statement for Hospital Industry 2016 Change Revenue Cost of goods sold 2015 $ 9,000,000 6,000,000 3,000,000 100.0% 66.7% 33.3% Change 11.1% 8.3% 16.7% $ 10,000,000 6,500,000 3,500,000 % 100.0% 65.0% 35.0% Change 10.0% 7.7% 14.3% 2017 $ 11,000,000 7,000,000 4,000,000 % 100.0%|| 63.6% 36.4% Gross Profit General and Administrative Selling and Marketing Depreciation Operating Income 1,300,000 700,000 360,000 640,000 14.4% 7.8% 4.0% 7.1% 3.8% 14.3% 11.1% 48.4% 1,350,000 800,000 400,000 950,000 13.5% 8.096 4.0% 9.5% 5.9% 10.0%) 10.0% 31.6% 1,430,000 880,000 440,000 1,250,000 13.0% 8.0% 4.0% 11.4% Interest Expenses 140,000 1.6% 150,000 150,000 0.0% 7.1% 0.0% 60.0% 1.5% 0.0% 8.0% 0.0% 0.0% 37.5% 1.491 0.0% 10.0% Income before taxes 500,000 5.6% 800,000 1,100,000 Income Tax 200,000 2.2% 60.0% 320,000 3.2% 37.5% 440,000 4.0% Net Income 300,000 3.3% 60.0% 480,000 4.8% 37.5% 660,000 6.0% RATIOS 2015 2016 2017 1) Liquidity Ratio: a) Current Ratio: Industry Northside Hospital 1.68 1.63 2.22 1.76 2.00 b) Quick Ratio: Industry Northside Hospital 0.84 0.77 1.15 1.00 0.88 c) Average Payment Period: Industry Northside Hospital 28.1 63.3 30.2 63.3 days 62.6 2) Asset Management Ratios a) Total Assets Turnover: Industry Northside Hospital 2.50 1.53 2.50 1.50 1.40 b) Fixed Asset Turnover: Industry Northside Hospital 3.60 6.45 4.00 7.33 3.50 days c) Average Collection Period: Industry Northside Hospital 24.33 37.85 48.67 36.50 52.14 d) Inventory Turnover Ratio: Industry Northside Hospital 7.50 4.23 8.13 3.75 times 3.60 3) Financial Leverage Ratios a) Total Debt to Total Assets: Industry Northside Hospital 30.0% 50.0% 31.8% 56.4% 46.6% b) Equity Multiplier: Industry Northside Hospital 1.44 1.87 1.43 2.00 1.47 2.29 c) Interest Coverage: Industry Northside Hospital 4.57 6.71 6.33 6.00 5.29 d) Fixed Charge Coverage: Industry Northside Hospital 6.33 6.00 8.33 5.29 6.71 4) Profitability Ratio a) Operating Profit Margin: Industry Northside Hospital 7.11% 8.70% 11.36% 10.57% 10.00% b) Net Profit Margin: Industry Northside Hospital 3.33% 4.44% 4.80% 5.00% 5.14% c) Operating Return on Assets: Industry Northside Hospital 23.8% 15.0% 28.4% 14.8% 13.4% d) Return on Total Assets: Industry Northside Hospital 8.3% 6.8% 12.0% 7.5% 7.2% e) Return on Equity: Industry Northside Hospital 17.1% 15.0% 22.0% 16.5% 12.8% Ratio Comparison Example: The liquidity ratio shows that Northside Hospital is more liquid than its industry and thus is better able to pay its short-term debt. Ratio Comparison 1: Ratio Comparison 2: Ratio Comparison 3