Consider the attached financial statements for Healthy Body Nursing Home, Inc., a for-profit, long-term care facility.

1. Perform a DuPont analysis on Healthy Body Nursing Home, Inc. Assume that the industry average ratios are as follows (10 points possible):
   • Total margin: 3.5%
   • Total asset turnover: 1.5
   • Equity multiplier: 2.5
   • Return on equity: 13.1%
2. Calculate and interpret the following ratios. Industry averages have been listed next to each ratio (3 points for each ratio calculation; 24 points total):
   • Return on assets: 5.2%
   • Current ratio: 2.0
   • Days cash on hand: 22 days
   • Average collection period: 19 days
   • Debt ratio: 71%
   • Debt-to-equity ratio: 2.5
   • Times interest earned ratio: 2.6
   • Fixed-asset turnover ratio: 1.4
3. Provide an interpretation for each of the eight (8) ratios listed above. Specifically, what is the final answer telling you about the financial health of the business? (2 points each; 16 points possible)
4. In approximately 300 to 400 words, discuss what the results of each ratio mean in relation to the industry averages. In your opinion, what can the financial manager of Healthy Body Nursing Home, Inc. do to improve the overall financial health of the business? What are some of the major limitations of ratio analysis that must be considered? Regardless of the specific line of business, should all healthcare businesses use the same set of ratios when conducting a financial statement analysis? Explain your answer.

**Attached data*** as follows healthy Body Nursing Home, Inc. Statement of Income and Retained Earnings Year Ended December 31, 2020 Revenue: Resident services revenue: $3,163,258 Provision for bad debts: 110,000 Net resident services revenue: 3,053,258 Other revenue: 106,146 Total revenues: $3,159,404 Expenses: Salaries and benefits: $1,515,438 Medical supplies and drugs: 966,781 Insurance and other: 296,357 Depreciation: 85,000 Interest: 206,780 Total expenses: $3,070,356 Operating income: $ 89,048 Income tax expense: 31,167 Net income: $ 57,881 Retained earnings, beginning of year: $ 199,961 Retained earnings, end of year: $ 257,842 BUS 330 Financial Statement Analysis Assignments Reference Healthy Body Nursing Home, Inc. Balance Sheet December 31, 2020 ASSETS Current assets: Cash: $105,737 Short-term securities: 200,000 Net accounts receivable: 215,600 Supplies: 87,655 Total current assets: $ 608,992 Property and equipment: 2,250,000 Less: Accumulated depreciation: 356,000 Net property and equipment: $ 1,894,000 Total assets: $ 2,502,992 LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities Accounts payable: $ 72,250 Accrued expenses: 192,900 Notes payable: 100,000 Current portion of long-term debt: 80,000 Total current liabilities: $ 445,150 Long-term debt: $ 1,700,000 Shareholders equity Common stock, $10 par value: $ 100,000 Retained earnings: 257,842 Total shareholders equity: $ 357,842 Total liabilities and shareholders equity: $ 2,502,992