Radnor Healthcare System, an 800-bed institution, is located in a highly competitive, urban market area. Using the financial ratios from Exhibit 4.22 for the current and previous years, evaluate Radnor's financial condition, focusing on revenue, expense, and profitability; liquidity, activity; and capital structure ratios, and compare them to national industry benchmarks for Radnor's bed size, using the data from Exhibit 4.16a. EXHIBIT 4.22 SELECTED FINANCIAL RATIOS FOR RADNOR HEALTHCARE SYSTEM Ratio 20X1 20x0 1.85 1.50 0.43 70 155 60 2.10 1.55 0.45 55 145 55 Liquidity ratios Current ratio Quick ratio Acid test ratio Days in accounts receivable Days cash on hand Average payment period (days) Revenue, expense, and profitability ratios Operating revenue per adjusted discharge Operating expense per adjusted discharge Salary and benefit expense as a percentage of total operating expense Operating margin Nonoperating revenue Return on assets Activity ratios Total asset turnover ratio Fixed asset turnover ratio Age of plant $12.500 $12,800 5596 $11,000 $10,500 50% (0.05) 0.06 0.02 0.02 0.07 0.06 1.12 2.55 11.75 0.99 2.35 11.03 Capital structure ratios Long-term debt to equity Equity to total assets Debt service coverage ratio 0.45 0.55 2.85 0.56 0.71 3.05 EXHIBIT 4.16a FINANCIAL RATIOS FOR ALL U.S. HOSPITALS BY BED SIZE Abo Optum & CMS Ratio Median Ratio Hospital Industry 200-299 1-99 Beds 300-399 100-199 Beds Desk Liquidity ratios Beds Beds 400+ Beds Positi Current ratio Quick ratio 2.11 2.18 2.04 1.88 1.71 184 Acid test ratio 1.52 1.65 1.39 1.27 0.30 1.42 1.50 Days in accounts receivable 0.35 Abo 0.18 0.20 0.20 49 0.38 Days cash on hand 47 Abo 45 48 86 Average payment period, days 85 Belc 81 102 76 119 SO 45 $1 Abo 56 53 Revenue, expense, and profitability ratios 52 Bek Operating revenue per adjusted discharge $7448 $7,086 Operating expense per adjusted discharge $6,407 $6,766 $7.197 $7.121 $7,517 56,494 Abo Salary and benefit expense as a percentage 56,112 $6.260 $6,819 40% $7,399 40% Bek of operating expense 38% 38% 38% 38% Bek Operating margin 0.03 0.02 Nonoperating revenue 0.03 0.04 0.04 0.04 0.04 Abo 0.05 Return on total assets 0.03 0.05 0.07 0.17 Vari 0.04 0.04 0.04 0.04 Return on net assets 0.05 0.05 Abo 0.08 0.08 0.08 0.09 0.10 0.09 Abo Activity ratios Total asset turnover ratio 1.07 1.19 1.03 0.99 Net fixed assets turnover ratio 1.03 1.06 Abo 2.12 2.17 2.03 2.11 2.04 Age of plant ratio 2.21 10.31 10.41 Abo 10.12 11.97 10.93 11.19 Belc Capital structure ratios Long-term debt to net assets ratio 0.21 0.18 0.31 0.42 0.38 0.59 Net assets to total assets ratio Belc 0.54 0.58 0.51 0.47 0.52 0.48 Abo Times interest earned ratio 3.78 3.47 3.43 3.64 443 5.13 Abo Debt service coverage ratio 3.18 3.51 3.63 3.50 6.36 4.24 Abo All ratio values, except for quick, acid test, and salary and benefit expense as a percentage of operating expense ratios were obtained from Optum Insight, 2011 Almanac ol Hopital Financ Operating indicators, 2011/2010 median value data. The quick, acid test and salary and benefit expense as a percentage of operating expense ratios were obtained from 2010 CMS cost report These are true up 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 x no EXHIBIT 4.16a FINANCIAL RATIOS FOR ALL U.S. HOSPITALS BY BED SIZE 1.39 0.20 Optum & CMS Median Ratio 200-299 300-399 Ratio Desi Hospital Industry 1-99 Beds 100-199 Beds Beds Beds 400+ Beds Positi Liquidity ratios Current ratio 2.11 2.18 2.04 1.88 1.71 1.84 Quick ratio Abo 1.52 1.65 1.27 142 1.50 Abo Acid test ratio 0.30 0.35 0.18 0.20 0.38 Abo Days in accounts receivable 49 47 45 44 48 44 Days cash on hand Belc 86 85 81 102 76 119 Abo Average payment period, days 50 45 51 56 53 52 Belc Revenue, expense, and profitability ratios Operating revenue per adjusted discharge $7,448 $7,086 $6,407 $6,766 $7,121 $7,517 Abo Operating expense per adjusted discharge $7,197 $6,494 $6,112 56,260 $6,819 $7,399 Belc Salary and benefit expense as a percentage 4096 40% 38% 38% 38% 38% Belc of operating expense Operating margin 0.03 0.02 0.03 0.04 0.04 0.04 Abo Nonoperating revenue 0.04 0.05 0.03 0.05 0.07 0.17 Vari Return on total assets 0.04 0.04 0.04 0.04 0.05 0.05 Abo Return on net assets 0.08 0.08 0.08 0.09 0.10 0.09 Abo Activity ratios Total asset turnover ratio 1.07 1.19 1.03 0.99 1.03 1.06 Abo Net fixed assets turnover ratio 2.12 2.17 2.03 2.11 2.04 221 Abo Age of plant ratio 10.31 1041 10.12 11.97 10.93 11.19 Belc Capital structure ratios Long-term debt to net assets ratio 0.21 0.18 0.31 0.42 0.38 0.59 Belc Net assets to total assets ratio 0.54 0.58 0.51 0.47 0.52 0.48 Abo Times interest earned ratio 3.47 3.43 3.64 4.43 5.13 Abo Debt service coverage ratio 3.18 3.51 3.63 3.50 6.36 Abo All ratio values, except for quick acid test, and salary and benefit expense as a percentage of operating expense ratios were obtained from Optum Insight, 2013 Almanac of Hospital Financ perating indicators, 2011/2010 median value data. The quick, acid test, and salary and benefit expense as a percentage of operating expense ratios were obtained from 2010 CMS cost report These are true up 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 ash. 3.78 4.24 Radnor Healthcare System, an 800-bed institution, is located in a highly competitive, urban market area. Using the financial ratios from Exhibit 4.22 for the current and previous years, evaluate Radnor's financial condition, focusing on revenue, expense, and profitability; liquidity, activity, and capital structure ratios, and compare them to national industry benchmarks for Radnor's bed size, using the data from Exhibit 4.16a. EXHIBIT 4.22 SELECTED FINANCIAL RATIOS FOR RADNOR HEALTHCARE SYSTEM Ratio 20X1 20xO 1.85 1.50 0.43 70 155 60 2.10 1.55 0.45 55 145 55 $12,500 $12,800 55% $11,000 $10,500 50% Liquidity ratios Current ratio Quick ratio Acid test ratio Days in accounts receivable Days cash on hand Average payment period (days) Revenue, expense, and profitability ratios Operating revenue per adjusted discharge Operating expense per adjusted discharge Salary and benefit expense as a percentage of total operating expense Operating margin Nonoperating revenue Return on assets Activity ratios Total asset turnover ratio Fixed asset turnover ratio Age of plant Capital structure ratios Long-term debt to equity Equity to total assets Debt service coverage ratio (0.05) 0.06 0.02 0.02 0.07 0.06 1.12 2.55 0.99 2.35 11.03 11.75 0.45 0.55 2.85 0.56 0.71 3.05 Radnor Healthcare System, an 800-bed institution, is located in a highly competitive, urban market area. Using the financial ratios from Exhibit 4.22 for the current and previous years, evaluate Radnor's financial condition, focusing on revenue, expense, and profitability; liquidity, activity; and capital structure ratios, and compare them to national industry benchmarks for Radnor's bed size, using the data from Exhibit 4.16a. EXHIBIT 4.22 SELECTED FINANCIAL RATIOS FOR RADNOR HEALTHCARE SYSTEM Ratio 20X1 20x0 1.85 1.50 0.43 70 155 60 2.10 1.55 0.45 55 145 55 Liquidity ratios Current ratio Quick ratio Acid test ratio Days in accounts receivable Days cash on hand Average payment period (days) Revenue, expense, and profitability ratios Operating revenue per adjusted discharge Operating expense per adjusted discharge Salary and benefit expense as a percentage of total operating expense Operating margin Nonoperating revenue Return on assets Activity ratios Total asset turnover ratio Fixed asset turnover ratio Age of plant $12.500 $12,800 5596 $11,000 $10,500 50% (0.05) 0.06 0.02 0.02 0.07 0.06 1.12 2.55 11.75 0.99 2.35 11.03 Capital structure ratios Long-term debt to equity Equity to total assets Debt service coverage ratio 0.45 0.55 2.85 0.56 0.71 3.05 EXHIBIT 4.16a FINANCIAL RATIOS FOR ALL U.S. HOSPITALS BY BED SIZE Abo Optum & CMS Ratio Median Ratio Hospital Industry 200-299 1-99 Beds 300-399 100-199 Beds Desk Liquidity ratios Beds Beds 400+ Beds Positi Current ratio Quick ratio 2.11 2.18 2.04 1.88 1.71 184 Acid test ratio 1.52 1.65 1.39 1.27 0.30 1.42 1.50 Days in accounts receivable 0.35 Abo 0.18 0.20 0.20 49 0.38 Days cash on hand 47 Abo 45 48 86 Average payment period, days 85 Belc 81 102 76 119 SO 45 $1 Abo 56 53 Revenue, expense, and profitability ratios 52 Bek Operating revenue per adjusted discharge $7448 $7,086 Operating expense per adjusted discharge $6,407 $6,766 $7.197 $7.121 $7,517 56,494 Abo Salary and benefit expense as a percentage 56,112 $6.260 $6,819 40% $7,399 40% Bek of operating expense 38% 38% 38% 38% Bek Operating margin 0.03 0.02 Nonoperating revenue 0.03 0.04 0.04 0.04 0.04 Abo 0.05 Return on total assets 0.03 0.05 0.07 0.17 Vari 0.04 0.04 0.04 0.04 Return on net assets 0.05 0.05 Abo 0.08 0.08 0.08 0.09 0.10 0.09 Abo Activity ratios Total asset turnover ratio 1.07 1.19 1.03 0.99 Net fixed assets turnover ratio 1.03 1.06 Abo 2.12 2.17 2.03 2.11 2.04 Age of plant ratio 2.21 10.31 10.41 Abo 10.12 11.97 10.93 11.19 Belc Capital structure ratios Long-term debt to net assets ratio 0.21 0.18 0.31 0.42 0.38 0.59 Net assets to total assets ratio Belc 0.54 0.58 0.51 0.47 0.52 0.48 Abo Times interest earned ratio 3.78 3.47 3.43 3.64 443 5.13 Abo Debt service coverage ratio 3.18 3.51 3.63 3.50 6.36 4.24 Abo All ratio values, except for quick, acid test, and salary and benefit expense as a percentage of operating expense ratios were obtained from Optum Insight, 2011 Almanac ol Hopital Financ Operating indicators, 2011/2010 median value data. The quick, acid test and salary and benefit expense as a percentage of operating expense ratios were obtained from 2010 CMS cost report These are true up 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 x no EXHIBIT 4.16a FINANCIAL RATIOS FOR ALL U.S. HOSPITALS BY BED SIZE 1.39 0.20 Optum & CMS Median Ratio 200-299 300-399 Ratio Desi Hospital Industry 1-99 Beds 100-199 Beds Beds Beds 400+ Beds Positi Liquidity ratios Current ratio 2.11 2.18 2.04 1.88 1.71 1.84 Quick ratio Abo 1.52 1.65 1.27 142 1.50 Abo Acid test ratio 0.30 0.35 0.18 0.20 0.38 Abo Days in accounts receivable 49 47 45 44 48 44 Days cash on hand Belc 86 85 81 102 76 119 Abo Average payment period, days 50 45 51 56 53 52 Belc Revenue, expense, and profitability ratios Operating revenue per adjusted discharge $7,448 $7,086 $6,407 $6,766 $7,121 $7,517 Abo Operating expense per adjusted discharge $7,197 $6,494 $6,112 56,260 $6,819 $7,399 Belc Salary and benefit expense as a percentage 4096 40% 38% 38% 38% 38% Belc of operating expense Operating margin 0.03 0.02 0.03 0.04 0.04 0.04 Abo Nonoperating revenue 0.04 0.05 0.03 0.05 0.07 0.17 Vari Return on total assets 0.04 0.04 0.04 0.04 0.05 0.05 Abo Return on net assets 0.08 0.08 0.08 0.09 0.10 0.09 Abo Activity ratios Total asset turnover ratio 1.07 1.19 1.03 0.99 1.03 1.06 Abo Net fixed assets turnover ratio 2.12 2.17 2.03 2.11 2.04 221 Abo Age of plant ratio 10.31 1041 10.12 11.97 10.93 11.19 Belc Capital structure ratios Long-term debt to net assets ratio 0.21 0.18 0.31 0.42 0.38 0.59 Belc Net assets to total assets ratio 0.54 0.58 0.51 0.47 0.52 0.48 Abo Times interest earned ratio 3.47 3.43 3.64 4.43 5.13 Abo Debt service coverage ratio 3.18 3.51 3.63 3.50 6.36 Abo All ratio values, except for quick acid test, and salary and benefit expense as a percentage of operating expense ratios were obtained from Optum Insight, 2013 Almanac of Hospital Financ perating indicators, 2011/2010 median value data. The quick, acid test, and salary and benefit expense as a percentage of operating expense ratios were obtained from 2010 CMS cost report These are true up 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 ash. 3.78 4.24 Radnor Healthcare System, an 800-bed institution, is located in a highly competitive, urban market area. Using the financial ratios from Exhibit 4.22 for the current and previous years, evaluate Radnor's financial condition, focusing on revenue, expense, and profitability; liquidity, activity, and capital structure ratios, and compare them to national industry benchmarks for Radnor's bed size, using the data from Exhibit 4.16a. EXHIBIT 4.22 SELECTED FINANCIAL RATIOS FOR RADNOR HEALTHCARE SYSTEM Ratio 20X1 20xO 1.85 1.50 0.43 70 155 60 2.10 1.55 0.45 55 145 55 $12,500 $12,800 55% $11,000 $10,500 50% Liquidity ratios Current ratio Quick ratio Acid test ratio Days in accounts receivable Days cash on hand Average payment period (days) Revenue, expense, and profitability ratios Operating revenue per adjusted discharge Operating expense per adjusted discharge Salary and benefit expense as a percentage of total operating expense Operating margin Nonoperating revenue Return on assets Activity ratios Total asset turnover ratio Fixed asset turnover ratio Age of plant Capital structure ratios Long-term debt to equity Equity to total assets Debt service coverage ratio (0.05) 0.06 0.02 0.02 0.07 0.06 1.12 2.55 0.99 2.35 11.03 11.75 0.45 0.55 2.85 0.56 0.71 3.05