interest earned. P14-2 (Computation of financial analysis ratios for a hospital, using financial statements) Following are condensed balance sheets and statements of operations for Elias Hospital for the years ended December 31, 2013 and 2012 (amounts in thousands of dollars). 570 Chapter 14 . Analysis of Financial Statements and Financial Condition Balance Sheets 2013 2012 $ 9,758 10,836 970 15,100 2,670 39,334 17,979 6,695 51,038 $115,046 $ 10,877 5,740 1,300 14,194 2,856 34,967 18,541 6,570 50,492 $110,570 Assets Current assets: Cash and cash equivalents Short-term investments Assets limited as to use Patient accounts receivable, net Supplies inventory Total current assets Assets limited as to use, net of current portion Long-term investments Property and equipment, net Total assets Liabilities and Net Assets Current liabilities: Current portion of long-term debt Accounts payable and accrued expenses Estimated third-party payer settlements Total current liabilities Long-term debt, net of current portion Total liabilities Net assets: Unrestricted Temporarily restricted Permanently restricted Total net assets Total liabilities and net assets $ 1.750 $ 1.470 7,787 2,143 11,400 23,144 34,544 7,496 1,942 11,188 24,014 35,202 70,846 2,115 7,541 80,502 $115,046 66,199 2,470 6,699 75,368 $110,570 $ 97,156 2,051 99,207 $ 92,942 2,162 95,104 Statements of Operations Unrestricted revenues, gains, and other support: Net patient service revenue Other revenue Total revenues, gains, and other support Expenses: Operating expenses Depreciation and amortization Interest Provision for bad debts Total expenses Operating gain Other incomeinvestment income Excess of revenues over expenses Other items (not detailed) Increase in unrestricted net assets 87,521 4,782 1,752 2,000 96,055 3,152 1,900 5,052 (405) $ 4,647 80,585 4,280 1,825 2,600 89,290 5,814 1,025 6,839 (1,140) $ 5,699 Use the preceding information to do the following: a. Compute the following ratios for both 2013 and 2012: 1. Current ratio 2. Number of days' cash on hand 3. Number of days' patient service revenue in receivables 4. Operating margin 5. Total margin 6. Long-term debt to capitalization ratio 7. Debt service coverage (Note: Assume that $1,750 of long-term debt was redeemed in 2013, and $1,850 was redeemed in 2012.) 8. Times interest earned b. Using these ratios and any other observations you make from reviewing the financial state- ments, discuss whether the hospital's financial position and results of operations improved or worsened in 2013 compared with 2012
