Directions

The board of directors for the hospital has asked you to complete the financial analysis workbook and then write a brief that interprets your calculations and evaluates the clinic's business performance. You will send your financial analysis to the board of directors to support your recommendation on whether the hospital should purchase the clinic.

Financial Analysis Workbook First, read the Lueders Medical Clinic 20172018 Financial Statements, which is linked in the Supporting Materials section. Then, perform the financial analysis of the clinic using the Financial Analysis Worksheet which is also linked in the What to Submit section. This way, you can apply the ratios and vertical and horizontal analyses to the clinics annual financials.

The board will review your report to verify that you:

Use the base amounts from the financial statements to perform the vertical analysis

Calculate the ratios accurately using the formulas provided in the workbook

Validate the accuracy of the ratios by showing the calculations and using the appropriate units

As you complete each section, it may be helpful to take notes about what you learn. Then, you can use your notes to evaluate the businesss financial status and write your brief to the board of directors.

Brief to the Board of Directors Once you have completed your financial analysis, interpret the ratios and vertical and horizontal analyses to evaluate the business performance of Lueders Medical Clinic.

In your brief, make sure to refer to your financial analysis workbook. It is important that you explain what each ratio tells you about the clinics performance. Then, recommend whether it is a good investment for the hospital to purchase the clinic. Use your financial analysis workbook to explain your decision.

Specifically, address the following in your brief:

Examine the clinics financial performance.

How does the clinics financial performance compare against industry averages and past performance?

What are the strengths and weaknesses of the clinics financial performance?

Recommend appropriate actions using your financial analysis as support.

Is purchasing the clinic is a good or bad investment?

What are some potential areas of improvement?

What to Submit

Every project has a deliverable or deliverables, which are the files that must be submitted before your project can be assessed. Your workbook must include two completed worksheets (Horizontal and Vertical Analysis and Ratio Analysis). It should be presentable and annotated for your audience.

Brief to the Board of Directors Your brief to the hospitals board of directors should be 250500 words or about 12 pages in length. Cite your sources appropriately.

Lueder's Medical Clinic 2017-2018 Financial Statement Lueder's Medical Clinic - Income Statement Year Ended December 31 Operating Revenue Gross patient service revenue Less: Contractual allowances Net patient service revenue Other operating revenue Total operating revenue 2017 $775,000.00 465,000.00 310,000.00 18,000.00 328,000.00 2018 $844,000.00 505,200.00 338,800.00 28,000.00 366,800.00 Operating Expenses Salaries and wages Employee benefits Supplies expense Purchased services Other operating expenses Provision for bad debts Depreciation and amortization Interest expense Total Expenses 2017 139,279.00 13,041.00 17,376.00 29,200.00 105,076.00 18,440.00 17,650.00 2,750.00 $342,812.00 2018 165,320.00 14,062.00 17,058.00 26,756.00 117,806.00 11,500.00 12,500.00 1,819.00 $366,821.00 Revenue over expenses from operations Nonoperating gains: Investment income Net income (loss) (14,812.00) 15,325.00 $513.00 (21.00) 1,445.00 $1,424.00 Lueders Medical Clinic - Balance Sheet Year Ended December 31 Assets Current Assets Cash and investments Patient accounts receivable, net allowance Supplies inventory Total current assets Property and equip, net of accumulated depreciation Total assets 2017 $12,000.00 75,675.00 30,100.00 117,775.00 37,672.00 $155,447.00 201 $13,6 66,13 19,34 99,12 60,32 $159,4 Notes Accounts Accounts receivable Supplies inventory Property and equipment Bad debts Total contractual allowances Net patient revenue Salaries and wages Long-term liabilities Lueders Medical Clinic Horizontal Analysis of Selected Accounts 2018 5 2017 Change Percent 66.135.00 75,675.00 (9.540.00) -0.1261 19,340.00 30,100.00 (10,760.00 -0.3575 60.321.00 37,672.00 22,649.00 0.6012 11,500.00 18,440.00 (6,940.00) -0.3764 505,200.00 465,000.00 40,200.00 0.0865 338,800.00 310,000.00 28,800.00 0.0929 165,320.00 139,279.00 26,041.00 0.1870 15,000.00 12,355.00 2,645.00 0.2141 Notes Vertical Analysis: Fill in the correct information for each of the base amounts below. Lueders Medical Clinic Vertical Analysis of Selected Accounts Year 2018 Year 2017 Accounts Amount $ Percent Amount $ Percent Industry Accounts receivable 66.135.00 #DIV/0! 75,675.00 #DIV/0! 45% Supplies inventory 19,340.00 #DIV/0! 30,100.00 #DIV/0! 10% Net patient revenue 338,800.00 #DIV/0! 310,000.00 #DIV/0! 100% Accounts payable 65 450.00 #DIV/0! 41,254.00 #DIV/0! 26% Salaries and wages 165,320.00 #DIV/0! 139,279.00 #DIV/0! 11% Depreciation and amortization 12.500.00 #DIV/0! 17,650.00 #DIV/0! 80% Long-term liabilities 15,000.00 #DIV/0! 12,355.00 #DIV/0! 6% Net income 1.424.00 #DIV/0! 513.00 #DIV/0! 10% Base Amount for Balance Sheet: 2018 2017 Base Amount for Income Statement: 2018 2017 Lueder's Medical Clinic 2017-2018 Financial Statements Lueder's Medical Clinic - Income Statement Year Ended December 31 Operating Revenue Gross patient service revenue Less: Contractual allowances Net patient service revenue Other operating revenue Total operating revenue 2017 $775,000.00 465,000.00 310,000.00 18,000.00 328,000.00 2018 $844,000.00 505,200.00 338,800.00 28,000.00 366,800.00 Operating Expenses Salaries and wages Employee benefits Supplies expense Purchased services 2017 139,279.00 13,041.00 17,376.00 29,200.00 2018 165,320.00 14,062.00 17,058.00 26,756.00 Lueder's Medical Clinic 2017-2018 Financial Statements ueder's Medical Clinic - Income Statement ear Ended December 31 2018 Operating Revenue Gross patient service revenue Less: Contractual allowances Net patient service revenue Other operating revenue Total operating revenue 2017 $775,000.00 465,000.00 310,000.00 18,000.00 328,000.00 $844,000.00 505,200.00 338,800.00 28,000.00 366,800.00 Operating Expenses Salaries and wages Employee benefits Supplies expense Purchased services Other operating expenses Provision for bad debts Depreciation and amortization Interest expense Total Expenses 2017 139,279.00 13,041.00 17,376.00 29,200.00 105,076.00 18,440.00 17,650.00 2,750.00 $342,812.00 2018 165,320.00 14,062.00 17,058.00 26,756.00 117,806.00 11,500.00 12,500.00 1,819.00 $366,821.00 Revenue over expenses from operations Nonoperating gains: Investment income Net income (loss) (14,812.00) 15,325.00 $513.00 (21.00) 1,445.00 $1,424.00 Lueders Medical Clinic - Balance Sheet Year Ended December 31 Assets Current Assets Cash and investments Patient accounts receivable, net allowance Supplies inventory Total current assets Property and equip, net of accumulated depreciation Total assets 2017 $12,000.00 75,675.00 30,100.00 117,775.00 37,672.00 $155,447.00 2018 $13,650.00 66,135.00 19,340.00 99,125.00 60,321.00 $159,446.00 Notes 139.279.00 Lueders Medical Clinic Horizontal Analysis of Selected Accounts Accounts 2018 5 2017 Change Percent Accounts receivable 66.135.00 75,675.00 (9,540.00) -0.1261 Supplies inventory 19.340.00 30,100.00 (10,760.00 -0.3575 Property and equipment 60.321.00 37,672.00 22,649.00 0.6012 Bad debts 11.500.00 18,440.00 (6,940.00) -0.3764 Total contractual allowances 505,200.00 465,000.00 40,200.00 0.0865 Net patient revenue 338.800.000 310.000.000 28,800.00 0.0929 Salaries and wages 165,320.00 139,279.00 26,041.00 0.1870 Long-term liabilities 15,000.00 12355.00 2,645.00 0.2141 Vertical Analysis: Fill in the correct information for each of the base amounts below. Lueders Medical Clinic Vertical Analysis of Selected Accounts Year 2018 Year 2017 Accounts Amount $ Percent Amount $ Percent Industry Accounts receivable 66,135.00 #DIV/0! 75,675.00 #DIV/0! 45% Supplies inventory 19,340.00 #DIV/0! 30,100.00 #DIV/0! 10% Net patient revenue 338,800.00 #DIV/0! 310,000.00 #DIV/0! 100% Accounts payable 65 450.00 #DIV/0! 41,254.00 #DIV/0! 26% Salaries and wages 165,320.00 #DIV/0! / #DIV/0! 11% Depreciation and amortization 12,500.00 #DIV/0! 17.650.00 #DIV/0! 80% Long-term liabilities 15,000.00 #DIV/0! 12.355.00 #DIV/0! 6% 1424.00 #DIV/01 513.00 #DIV/0! 10% Notes Net income Base Amount for Balance Sheet: : 2018 2017| Base Amount for Income Statement: 2018 2017| Lueder's Medical Clinic 2017-2018 Financial Statements Lueder's Medical Clinic - Income Statement Year Ended December 31 Operating Revenue Gross patient service revenue Less: Contractual allowances Net patient service revenue Other operating revenue Total operating revenue 2017 $775,000.00 465,000.00 310,000.00 18,000.00 328,000.00 2018 $844,000.00 505,200.00 338,800.00 28,000.00 366,800.00 Operating Expenses Salaries and wages Employee benefits Supplies expense Purchased services Other operating expenses Provision for bad debts Depreciation and amortization Interest expense Total Expenses 2017 139,279.00 13,041.00 17,376.00 29,200.00 105,076.00 18,440.00 17,650.00 2,750.00 $342,812.00 2018 165,320.00 14,062.00 17,058.00 26,756.00 117,806.00 11,500.00 12,500.00 1,819.00 $366,821.00 Revenue over expenses from operations Nonoperating gains: Investment income Net income (loss) (14,812.00) 15,325.00 $513.00 (21.00) 1,445.00 $1,424.00