Exhibit 4.16a Key Financial Ratios

Liquidity ratios Formulas

Current ratio Current Assets / Current Liabilities

Quick ratio (Cash + Marketable Securities + Net Receivables) / Current Liabilities

Acid test ratio (Cash + Marketable Securities) / Current Liabilities

Days in accounts receivable Net Patient Accounts Receivables / (Net Patient Revenues / 365)

Days cash on hand [(Cash + Marketable Securities + Long-Term Investments/Operating Expenses Depreciation and Amortization Expenses) / 365]

Average payment period, days Current Liabilities / [(Operating Expenses Depreciation and Amortization Expenses) / 365]

Revenues, expenses, and profitability Formulas

Operating revenues per adjusted discharge Total Operating Revenues / Adjusted Discharges

Operating expense per adjusted discharge Total Operating Expenses / Adjusted Discharges

Salary and benefit expense as percentage of operating expense Total Salary and Benefit Expense / Total Operating Expenses

Operating margin Operating Income / Total Operating Revenues

Nonoperating revenue ratio Nonoperating Revenues and Other Income / Total Operating Revenues

Return on total assets Excess of Revenues over Expenses / Total Assets

Return on net assets Excess of Revenues over Expenses / Net Assets

Activity Ratios Formulas

Total asset turnover ratio Total Operating Revenues / Total Assets

Net fixed assets turnover ratio Total Operating Revenues / Net Plant and Equipment

Age of plant ratio Accumulated Depreciation / Depreciation Expense

Capital Structure ratios Formulas

Long-term debt to net assets ratio Long-Term Debt / Net Assets

Net assets to total assets ratio Net Assets / Total Assets

Times interest earned ratio (Excess of Revenues over Expenses + Interest Expense) / Interest Expense

Debt service coverage ratio (Excess of Revenues over Expenses + Interest Expense + Depreciation and Amortization Expenses) / (Interest Expense + Principal Payments)

a Adjusted Discharges = (Total Gross Patient Revenue / Total Gross Inpatient Revenues) Total Discharges. b In for-profit health care organizations, calculated as Net Income / Total Assets.

c Called return on equity in for-profit health care organizations, and calculated as Net Income / Owners Equity. d Called long-term debt to equity in for-profit health care organizations, and calculated as Long-Term Debt / Owners Equity.

e Called equity to total assets in for-profit health care organizations, and calculated as Owners Equity / Total Assets.

f In for-profit health care organizations, calculated as (Net Income + Interest Expense) / Interest Expense.

g In for-profit health care organizations, calculated as (Net Income + Interest Expense + Depreciation and Amortization Expenses) / (Interest Expense + Principal Payments

Ratio analysis. The statement of operations and balance sheet for Longwood Community Hospital for the years ended 20X0 and 20X1 are shown in Exhibits 4.19a and 4.19b. Compute the following ratios for both years: current, acid test, days in accounts receiv- able, average payment period, long-term debt to net assets, net assets to total assets, total asset turnover, fixed asset turnover, operating revenue per adjusted discharge, oper- ating expense per adjusted discharge, salary and benefit expense as a percentage of total operating expense, return on total assets, and operating margin. After calculating the ratios, comment on Longwoods liquidity; efficient use of assets or activity ratios; revenue, expense, and profitability; and capital structure relative to its industry benchmarks for its respective bed size (listed in Exhibit 4.16a). Cite at least two meaningful ratios per category. Assume for this analysis that Longwood is a 350-bed facility and its adjusted discharges were 5,500 for 20X0 and 5,400 for 20X1.

EXHIBIT 4.19a STATEMENT OF OPERATIONS FOR LONGWOOD COMMUNITY HOSPITAL Longwood Community Hospital Statement of Operations for the Years Ended December 31, 20X1 and 20X0 (in thousands) 20X1 20X0

Revenues	20x1	20x0
Net patient service revenue	54,000	$53,000
Other revenue	1,000	500
Total operating revenues	55,000	53,500
Expenses
Salaries and benefits	23,000	22,000
Supplies and other expenses	20,000	23,000
Depreciation	10,000	9,000
Total operating expenses	53,000	54,000
Operating income	2,000	(500)
Excess of revenues over expenses	2,000	(500)
Increase (decrease) in net assets	$2,000	($500)

Balance sheet for longwood community hospital Exhibit 4.19b

Particulars	20x1	20x0
Current Assets
Cash and Cash Equivalents	$6,000	$4,000
Net patient receivables	10,000	8,500
Prepaid expenses	1,400	1,300
Total current assets	17,400	13,800
Noncurrent assets
Plants, property, and Equipment
Gross plant, property &Equip.	27,000	24,000
(Less accumulated depreciation)	(1,500)	(1,300)
Net plant, property, and equip.	25,500	22,700
Construction in progress	1,000	4,000
Total assets	$43,900	$40,500
Current liabilities
Account payable	$500	$750
Salaries payable	7,800	9,000
Total current liabilities	8,300	9,750
Long-term liabilities
Bond payable	9,000	8,000
Total long-term liabilities	9,000	8,000
Net Assets	26,600	22,750
Total liabilities and net assets	$43,900	$40,500