exhibits 4.20a and 4.20b show the statement of operations and balance sheet for Louisville community hospital for the years ended in 20X0 and 20X1.
- compute the following ratios for both years current, quick, acid test, days in accounts receivable, days cash on hand, average payment period, operating revenue per adjusted discharge, operating expense per adjusted discharge, salary and benefit expense as percentage of total operating expense, operating margin, non-operating revenue, return on total assets and net assets, total asset turnover, fixed asset turnover, age of plant, long term debt to net assets, and net assets to total assets.
- Comment on Louisville's liquidity; efficient use of assets; revenue, expense, and profitability; and capital structure, citing at least one ratio per category. Use the national hospitality industry benchmarks listed in exhibit 4.16a for 125 beds and assume that Louisville's adjusted discharges were 7,100 for 20X0 and 7,300 for 20X1.
I have attached exhibits 20 a and b as well as 4.16a
EXHIBIT 4.16a FINANCIAL RATIOS FOR ALL U.S. HOSPITALS BY BED SIZE Optum & CMS Ratio Median Ratio Hospital Industry 1-99 Beds 200-299 100-199 Beds 300-399 Beds Beds Desired Liquidity ratios 400 + Beds Position Current ratio Quick ratio 2.17 2.63 1.77 1.62 1.53 1.64 2.25 1.80 1.35 1.45 Above Acid test ratio 1.44 Days in accounts receivable 0.50 0.52 1.48 0.37 0.62 Above 0.47 47 0.39 43 Above Days' cash on hand 48 43 41 44 101 Average payment period, days 116 80 Below 99 56 105 65 153 49 68 Above 63 64 Below Revenue, expense, and profitability ratios Operating revenue per adjusted discharge Operating expense per adjusted discharge $9,845 $8,204 $10,650 $9,778 $11,904 $9,125 $12,431 $14,655 $10,223 Above Salary and benefit expense as a $11,381 42% $12,234 $14,816 percentage of operating expense 43% Below 37% 38% 38% 38% Below Operating margin 0.04 Nonoperating revenue -0.01 0.02 0.02 0.03 0.04 0.06 Return on total assets 0.01 Above 0.02 0.06 0.03 0.03 0.19 Return on net assets 0.02 0.05 Varies 0.07 0.03 0.04 0.09 0.05 Above 0.08 0.08 0.10 0.09 Above Activity ratios Total asset turnover ratio 1.11 1.14 Net fixed assets turnover ratio 1.00 1.08 2.00 0.96 0.92 Age of plant ratio 1.91 Above 1.93 11.79 2.01 10.63 2.03 1.98 12.35 Above 9.84 12.17 9.50 Below Capital structure ratios ong-term debt to net assets ratio 0.33 0.30 Net assets to total assets ratio 0.16 0.72 0.58 0.49 0.51 0.54 Below imes interest earned ratio 0.54 0.41 0.46 0.43 4.30 3.94 Above Debt service coverage ratio 5.16 4.35 5.11 5.77 3.82 3.14 Above 4.27 4.18 4.00 4.34 Above I ratio values, except for quick, acid test, times interest earned, and debt service coverage ratios, were obtained from: Optum Insight"2018 Almanac of Hospital Financial and Operating Indi 16 median value data. The quick, acid test, times interest earned, and debt service coverage ratios were computed from 2016 CMS cost report data. ese are true to a certain point. For example, in general the higher the better for the current ratio, but after a certain point, the organization might be better off investing some of the excessEXHIBIT 4.20a STATEMENT OF OPERATIONS FOR LOUISVILLE COMMUNITY HOSPITAL Louisville Community Hospital Statement of Operations (in thousands) for the Years Ended December 31, 20X1 and 20X0 20X1 Revenues 20XO Net patient service revenue Net assets released from restriction $75,000 $73,000 Total operating revenues 2,100 1,700 77,100 74,700 Expenses Salaries and benefits 48,000 mdung those 43,000 Supplies and other expenses 30,000 Hibra hegota theg 27,500 Depreciation 1,500 ooopstelemost 1,000 General services 950 850 Total operating expenses 80,450 72,350 Operating income (3,350) 2,350 Nonoperating income 9,500 3,500 Excess of revenues over expenses 6,150 5,850 Increase (decrease) in net assets $6,150 $5,850EXHIBIT 4.20b BALANCE SHEET FOR LOUISVILLE COMMUNITY H Louisville Community Hospital Balance Sheet (in thousands) for the Years Ended December 31, 20X1 and 20X0 20X1 20XO Current assets Cash and cash equivalents $1,800 Net patient receivables 9,000 ver ouvise Inel $600 Inventory cor,S 7,500 750 350 Total current assets 11,550 8,450 Noncurrent assets Plant, property, and equipment amanad bris esh Gross plant, property, and equipment 40,500 camero ons 35,000 (less accumulated depreciation) (11,000) (8,500) Net plant, property, and equipment 29,500 29Divine ly 26,500 Board-designated funds 024,08 33,000 42,000 Total assets (ONE, E ) 74,050 76,950 Current liabilities 00212 amoo Went Accounts payable 7,500 6,000 Accrued expenses ber.a 1,900 1,850 Total current liabilities 9,400 7,850 as ish m (easenab) on Long-term liabilities 20,500 22,000 Bonds payable 20,500 22,000 Total long-term liabilities Net assets 44,150 47,100 Total liabilities and net assets $74,050 $76,950
