Question
Exhibit 4.16a Key Financial Ratios Liquidity ratios Formulas Current ratio Current Assets / Current Liabilities Quick ratio (Cash + Marketable Securities + Net Receivables) /
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
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Question
Compare Spring Hill Community Hospitals liquidity, revenue, expense and profitability, activity, and capital structure ratios with its national industry benchmarks. Use a sheet for key financial ratios formula on page 186 in Financial Management of Healthcare Organizations 4th ed Zelman, McCue, Glick& Thomas.
Note:The answer is needed not information for a book.
Ratio | 20X1 | 20X0 |
Liquidity ratios | ||
Current ratio | 1.78 | 2.15 |
Quick ratio | 1.29 | 1.55 |
Acid test ratio | 0.18 | 0.35 |
Days in accounts receivable | 82 | 60 |
Days cash on hand | 60 | 100 |
Average payment period, days | 40 | 50 |
Revenue, expense, and profitability ratios | ||
Operating revenue per adjusted discharge | $7,900 | $7,800 |
Operating expense per adjusted discharge | $8,200 | $7,400 |
Salary and benefit as a percentage of total operating expense | 55% | 45% |
Operating margin | (0.04) | 0.05 |
Non-operating revenue | 0.06 | 0.01 |
Return on total assets | 0.02 | 0.03 |
Return on net assets | 0.08 | 0.05 |
Activity ratios | ||
Total asset turnover ratio | 1.07 | 0.84 |
Fixed asset turnover ratio | 2.70 | 1.46 |
Age of plant | 9.26 | 11.08 |
Capital structure ratios | ||
Long-term debt to equity | 0.65 | 0.25 |
Net assets to total assets | 0.35 | 0.52 |
Times interest earned | 2.00 | 3.20 |
Debt service coverage ratio | 2.50 | 3.70 |
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