Profitability ratios

Bayside Memorial Hospital's financial statements follow:

INCOME STATMENT20182017Revenues:Patient service revenue$106,502$95,398Less: provision for bad debts4,3283,469Net patient service$102,174$91,929Premium revenue5,2324,622Other revenue3,6446,014Total operating revenues$111,050$102,565Expenses:Nursing services$58,285$56,752Dietary services5,4244,718General services13,19811,655Administrative services11,42711,585Employee health and welfare10,25010,705Malpractice insurance1,3201,204Depreciation4,1304,025Interest expense1,5421,521Total expenses$105,576$102,165Operating income$5,474$400Nonoperating income2,0981,995Net income$7,572$2,395

BALANCE SHEET20182017Cash and equivalents$3,263$3,095Short-term investments4,0002,000Net patient accounts recevable23,84022,738Inventories3,1772,982Total current assets$34,280$30,815Gross property and equipment$145,158$140,865Accumulated depreciation25,16021,030Net property and equipment$119,998$119,835Total Assets$154,278$150,650Accounts payable$4,707$5,145Accrued expenses5,6505,421Notes payable2,9756,237Total current liabilities$13,332$16,803Long-term debt$28,75030,900Finance lease obligations1,8322,155Total long-term liabilities$30,582$33,055Net assets (equity)$110,364$100,792Total liabilities and net assets$154,278$150,650

a. Calculate Bayside's 2018 Total margin? answer as a percentage Round to one decimal place.

2017Bayside's total margin is 2.3% Industry average is 5.0%

Note how Bayside's total margin has increased from 2017, and is now well above the industry average.Its profitability has improved.

b. calculate Bayside's 2018 current ratio.?

Round to one decimal place.

2017Bayside's current ratio is 1.8 Industry average is 2

Note how Bayside's current ratio has increased from 2017, and is now above the industry average.

Bayside's liquidity, measured by its current ratio, has improved.

c. calculate Bayside's 2018 days cash on hand?

Round to one decimal place.

2017Bayside's days cash on hand is 18.9 Industry average is 30.6

Note how Bayside's days cash on hand has increased from 2017, but it still lags the industry average.

This is probably a better measurement of Bayside's liquidity, which is worse than the average hospital.

d. calculate Bayside's 2018 debt ratio?

answer as a percentage.Round to one decimal place.

2017Bayside's debt ratio is 33.1% Industry average is 42.3%

Note how Bayside's debt utilization has decreased from 2017, falling further below the industry average.

e. calculate Bayside's 2018 debt to equity ratio.?

answer as a percentage.Round to one decimal place.

2017Bayside's debt to equity ratio is 49.5% Industry average is 73.3%

Note how Bayside's debt utilization has decreased from 2017, falling even further below the industry average.

f. calculate Bayside's 2018 TIE ratio?

Round to one decimal place.

2017Bayside's TIE ratio is 2.6 Industry average is 4.0

Note how Bayside's ability to pay its interest has improved since 2017, even rising above the industry average.

g. calculate Bayside's 2018 CFC ratio.? Bayside's debt principle repayment in 2018 was $2,000, and its lease payment due was $1,368.

Round to one decimal place.

2017Bayside's CFC ratio is 2.3 Industry average is 2.3

Note how the amount of cash flow Bayside has to cover its fixed financial requirements has improved since 2017, also rising above the industry average.

h. calculate Bayside's 2018 fixed asset turnover.?

Round to two decimal places.

2017Bayside's fixed asset turnover is 0.86 Industry average is 2.2

Note how Bayside has improved its asset management, as measured this way, but its use of assets is not up to the industry average.

i. calculate Bayside's 2018 total asset turnover ratio.?

Round to two decimal places.

2017Bayside's total asset turnover ratio is 0.68 Industry average is 0.97

Note how Bayside has improved its asset management, as measured this way, but again its use of assets is not up to the industry average.

j. calculate Bayside's 2018 days in patient accounts receivable ?

Round to one decimal place.

2017Bayside's days in patient accounts receivable is 90.3 Industry average is 64.0

Note how Bayside has improved its days in patient account receivable, but there seems to be some issues with its receivables when compared to the industry average.

k. calculate Bayside's 2018 average age of plant ?

Round to one decimal place.

2017Bayside's average age of plant is 5.2 Industry average is 9.1

Bayside's fixed assets are much newer than the average hospital.This explains why Bayside's fixed asset utilization comes out poorly.New assets lead to higher book values, which bias asset utilization ratios downward.