During the immediate past Discussion Board Assessment, you responded to the questions posed by your CFO regarding the essential items of the Financial Statement, including reasons for audit failures. During this Module, he told you that one could refer to ratio analysis as the surgical accounting tool to dissect the companys financial statement, thus having a lens into the companys financial health. You nodded in agreement. He quickly asked you to provide him with some of the analyses.

Similar to the Tables/Exhibits in Chapter 14 of the book, lets assume that you conducted ratio analyses (and presented same to him) on the companys financial statement, and you arrived at the following numbers: Current Ratio of 2.0; Days Cash on Hand (78.1); Days in Account Receivable (72.0 days); Total Asset Turnover (0.37); Interest Coverage (7.0); Long-term Debt to Net Assets ($2.71); Total Margin (10%); and Return on Assets of (2%).

However, when you presented the above numbers to your CFO, he wanted you to answer the following and discuss the same with your team members:

1. Evaluate why we use ratios to analyze the financial statements of organizations.
2. Discuss the interpretation and implication of those numbers.
3. Facing the reality that patients can bring lawsuits against the Healthcare Organization, he (your CFO) wants to know what, if anything, must be disclosed in the notes to the companys Financial Statements.