Ratio analysis. The statement of operations and balance sheet for Longwood Commu- nity Hospital for the years ended 20X0 and 20X1 are shown in Exhibits 4.19a and 4.19b. Compute the following ratios for both years: current, acid test, days in accounts receiv- able, average payment period, long-term debt to net assets, net assets to total assets, total asset turnover, fixed asset turnover, operating revenue per adjusted discharge, oper- ating expense per adjusted discharge, salary and benefit expense as a percentage of total operating expense, return on total assets, and operating margin. After calculating the ratios, comment on Longwoods liquidity; efficient use of assets or activity ratios; revenue, expense, and profitability; and capital structure relative to its industry benchmarks for its respective bed size (listed in Exhibit 4.16a). Cite at least two meaningful ratios per category. Assume for this analysis that Longwood is a 350-bed facility and its adjusted discharges were 5,500 for 20X0 and 5,400 for 20X1.

Home Tools Healthcare Acct.pdf x Sign In 191 (217 of 704) e 70.5% REVIEW OUESTIONS AND PRORIEMS 191 Search 'Delete Page EXHIBIT 4.20a STATEMENT OF OPERATIONS FOR LOUISVILLE COMMUNITY HOSPITAL D. Export PDF Louisville Community Hospital Statement of Operations for the Years Ended December 31 20X1 and 20X0 (In thousands) Adobe Export PDF Convert PDF Files to Word or Excel Online 20X1 20x0 Select PDF File $23,000 1.000 24,000 $ 19.000 800 19,800 Healthcare Acct.pdf X Revenues Net patient service revenue Net assets released from restriction Total operating revenues Expenses Salaries and benefits Supplies and other expenses Depreciation General services Total operating expenses Convert to 9,000 6.000 2000 Microsoft Word (.docx) 13,000 7,000 2,500 200 22,700 1,200 4,000 100 17,1001 Operating income Nonoperating income 2.700 2.500 Document Language: English (U.S.) Change Excess of revenue over expenses 5,300 5,2001 Increase (decrease in not assets $5,300 $5,200 Convert category. Assume for this analysis that Longwood is a 350 bed facility and its adjusted discharges were 5.500 for 2uxc and 5,400 for 20X1. 14. Ratio analysis. Exhibits 420a and 4.206 show the statement of operations and balance sheet for Louisville Community Hospital for the years ended Zaxo 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 a percentage of total operating expense, operating margin nonoperating revenue, retum on total assets and net assets, total asset turnover, fued asset turnover, age of plant long-term debt to net assets, and net assets to total assets. Comment on Louisville's liquidity: elf- cient use of assets; revenus, expense, and profitability and capital structure, citing at least Create for Free 7-Day Trial Home Tools Healthcare Acct.pdf x Sign In 190 (216 of 704) e 70.5% 190 CHAPTER 4 FINANCIAL STATEMENT ANALYSIS Search 'Delete Page EXHIBIT 4.196 BALANCE SHEET FOR LONGWOOD COMMUNITY HOSPITAL D. Export PDF 20x0 Longwood Community Hospital Balance Sheet December 31, 20X1 and 20X0 in thousands) 20X1 Current assets Cash and cash equivalents $6,000 Net patient receivables 10.000 Prepaid expenses 1400 Total current assets 17.400 Adobe Export PDF Convert PDF Files to Word or Excel Online $4,000 8,500 _1200 13,800 Select PDF File Healthcare Acct.pdf X Noncurrent assets Plant property, and equipment Gross plant property, and equipment (less accumulated depreciation Net plant, property, and equipment Convert to 27.000 11.500 25,500 24,000 (1,3001 22,200 Microsoft Word (.docx) Construction in progress 1.000 4,000 Total assets $43,900 $40,500 Document Language: English (U.S.) Change Current liabilities Accounts payable Salaries payable Total current liabilities Long-term liabilities Bonds payable Total long-term liabilities $500 7.800 4.300 $250 0,000 0,250 Convert 9.000 9,000 8,000 8,000 Net assets 26,600 22.750 Total liabilities and net assets 543,900 $40.500 Create, edit and sign PDF forms & agreements Free 7-Day Trial Home Tools Healthcare Acct.pdf x Sign In 189 (215 of 704) e 70.5% REVIEW CESTIONS AND PROREMS 189 Search 'Delete Page EXHIBIT 4.18 SELECTED RATIOS FOR AVON HOSPITAL AND THE INDUSTRY BENCHMARKS D. Export PDF Industry Benchmark Avon Hospital 120X1) Avon Hospital (200) Capital Ratios Adobe Export PDF Convert PDF Files to Word or Excel Online 3.000 4.00 Debt service coverage Times interest earned Net assets to total assets long-term debt to net assets 400 045 055 2.401 3 III 11.41 Select PDF File 11.50 Healthcare Acct.pdf X Convert to Microsoft Word (.docx) EXHIBIT 4.193 STATEMENT OF OPERATIONS FOR LONGWOOD COMMUNITY HOSPITAL Document Language: English (U.S.) Change Longwood Community Hospital Statement of Operations for the Years Ended December 31, 20X1 and 20X0 (in thousands) 20X1 20X0 Convert Revenues Net patient service revenue Other revenue Total operating revenues $54,000 1.000 55.000 $53,000 500 53,500 Expenses Salaries and benefits Supplies and other expenses Depreciation Total operating expenses 23,000 20,000 10,000 53,000 22.000 23.000 9,000 54.000 Create, edit and sign PDF forms & agreements Operating income Excess of revenues over expenses Increase (decrease in net assets 2,000 2,000 (500) (500) $2,000 ($500) Free 7-Day Trial Home Tools Healthcare Acct.pdf x . 185 (211 of 704) 0 + 93.1% EXHIBIT 4.16a FINANCIAL RATIOS FOR ALL U.S. HOSPITALS BY BED SIZE Optum & CMS Median Ratio 200-299 300-399 Desired Ratio Hospital Industry 1-99 Beds 100-199 Beds Beds Beds 400+ Beds Position Liquidity ratios Current ratio 2.11 2.18 2.04 1.88 1.71 1.84 Quick ratio Above 1.52 1.65 1.39 1.27 1.42 1.50 Above Acid test ratio 0.30 0.35 0.18 0.20 0.20 0.38 Above Days in accounts receivable 49 47 45 44 48 44 Below Days cash on hand 86 85 81 102 76 119 Above Average payment period, days 50 45 51 56 53 52 Below Revenue, expense, and profitability ratios Operating revenue per adjusted discharge $7,448 $7,086 $6,407 $6,766 $7,121 $7,517 Above Operating expense per adjusted discharge $7,197 $6,494 $6,112 $6,260 $6,819 $7,399 Below Salary and benefit expense as a percentage 40% 40% 38% 38% 38% 38% Below of operating expense Operating margin 0.03 0.02 0.03 0.04 0.04 0.04 Above Nonoperating revenue 0.04 0.05 0.03 0.05 0.07 0.17 Varies Return on total assets 0.04 0.04 0.04 0.04 0.05 0.05 Above Return on net assets 0.08 0.08 0.08 0.09 0.10 0.09 Above Activity ratios Total asset turnover ratio 1.07 1.19 1.03 0.99 1.03 1.06 Above Net fixed assets turnover ratio 2.12 2.17 2.03 2.11 2.04 2.21 Above Age of plant ratio 10.31 10.41 10.12 11.97 10.93 11.19 Below Capital structure ratios Long-term debt to net assets ratio 0.21 0.18 0.31 0.42 0.38 0.59 Below Net assets to total assets ratio 0.54 0.58 0.51 0.47 0.52 0.48 Above Times interest earned ratio 3.78 3.47 3.43 3.64 4.43 5.13 Above Debt service coverage ratio 3.18 3.51 3.63 3.50 6.36 4.24 Above "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 Financial and 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 data. "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 excess cash. 185