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 $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 11.75 0.99 2.35 11.03 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 Optum & CMS Median Ratio Ratio 200-299 300-399 Desh 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 Abo Quick ratio 1.52 1.65 Acid test ratio 1.39 1.27 142 1.50 Abo 0.30 0.35 0.18 0.20 0.20 0.38 Abo Days in accounts receivable 49 47 45 44 48 44 Belc Days cash on hand 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 $6,260 $6,819 $7,399 Belc Salary and benefit expense as a percentage 40% 4096 38% 38% 38% 3896 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 Abo Return on net assets 0.08 0.08 0.08 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 2.21 Abo Age of plant ratio 10.31 1041 10.12 11.97 10.93 Belc Capital structure ratios Long-term debt to net assets ratio 0.21 0.18 0.31 0.38 0.59 Belc Net assets to total assets ratio 0.54 0.58 0.51 047 0.52 0.48 Abo Times interest earned ratio 3.78 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 4.24 Abo All ratio values, except for quick acid test, and salary and benefit expense as a percentage of operating expense ratlos were obtained from Optum Insight 2013 Almanac of Hospital Pinang Operating Indicators. 2011/2010 median value data. The qukk, 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. 0.05 0.09 11.19 0.42