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

Horizontal, vertical, and ratio analyses. Exhibits 4.27a and 4.27b show the statement of operations and balance sheet for the 310-bed Wakeland Community Hospital for 20X0 and 20X1. Adjusted discharges for 20X0 and 20X1 are 25,000 and 26,000, respectively.

a. Perform a horizontal analysis on both statements.

b. Perform a vertical analysis on both statements relative to 20X0

c. Compute all the selected ratios listed in Exhibit 4.16a, and compare them with the industry benchmarks.

Using these financial performance measures, evaluate the financial state of Wakeland Community. The debt principal payments each year are $5.5 million, whereas adjusted discharges, as mentioned, are 25,000 in 20X0 and 26,000 in 20X1.

EXHIBIT 4.27a STATEMENT OF OPERATIONS FOR WAKELAND COMMUNITY HOSPITAL

Wakeland Community Hospital

Statement of Operations for the Years Ended December 31, 20X1 and 20X0 (in thousands)

Particulars	20x1	20x0
Revenues
Net patient service revenue	$225,000	$210,000
Other operating revenue	6,400	5,700
Total operating revenues	231,400	215,700
Operating expenses
Salaries and benefits	124,173	110,167
Supplies and other expenses	85,000	61,000
Depreciation	12,000	11,300
Interest	4,500	2,500
Total operating expenses	225,673	184,967
Income from operations	5,757	30,733
Nonoperating income
Investment income/contributions	7,500	8,500
Excess of revenue over expenses	13,227	39,233
Net Income	13,227	39,233

Exhibit 4.27b Balance Sheet for Wakeland Community Hospital

Particulars	20x1	20x0
Current assets
Cash and cash equivalents	$40,500	$35,500
Net patient A/R	39,500	36,400
Inventories	3,800	4,000
Other current assets	6,500	5,200
Total current assets	90,300	81,100
Plant, property, and equipment
Gross plant, property, and equipment	215,000	175,500
Less Accumulated depreciation)	(65,000)	(107,000)
Net property, plant, and equipment	12,000	11,300
Interest	4,500	2,500
Total operating expenses	225,673	184,967
Income from operations	5,757	30,733
Funded depreciation/board-designated funds
Cash and short-term investments	185,000	110,000
Total assets	$425,300	$259,600
Current liabilities
Account Payable	$14,500	$8,500
Salaries payable	4,500	3,500
Notes payable	4,300	4,500
Total current liabilities	23,300	16,500
Long-term liabilities
Bonds payable	60,000	27,500
Total long-term liabilities	60,000	27,500
Net assets	342,000	215,600
Total liabilities and assets	$425,300	$259,600