Ratio	Optum & CMS Median Ratio Hospital Industry	1-99 beds	100-199 beds	200-299 beds	300-399 beds	400+ beds	Desired position
Liquidity Ratios
Current ratio	2.11	2.18	2.04	1.88	1.71	1.84	Above
Quick ratio	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 account rec.	49	47	45	44	48	44	Below
Days cash on hand	86	85	81	102	76	119	Above
Average pmt period, days	50	45	51	56	53	52	Below
Revenue, expense, and profitability ratios
Operating revenue per adjusted	$7,448	$7,086	$6,407	$6,766	$7,121	$7,517	Above
Operating expense per adjusted	$7,197	$6,494	$6,112	$6,260	$6,819	$7,399	Below
Salary and benefit expense as a percentage of operating expense	40%	40%	38%	38%	38%	38%	Below
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 nets 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 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

. Horizontal, vertical, and ratio analyses. Exhibits 4.29a and 4.29b show the statement of operations and balance sheet for Resort Hospital for 20X1 and 20X0. The debt principal payment each year for Resort is $1,300,000, and its adjusted discharges are 6,500 for 20X0 and 5,500 for 20X1.

a.Perform horizontal and vertical analyses on the balance sheet using the statement of operations.

b. Perform horizontal and vertical analyses using the balance sheet.

c. Compute all the selected ratios listed in Exhibit 4.16a.

Evaluate the financial state of Resort Hospital, a 60-bed facility, using all of the above measures. Make the basis for the vertical analysis the year 20X0.

Resort Hospital

Statement of Operations for the Years Ended December 31, 20X1 and 20X0 (in thousands)

Particulars	20x1	20x0
Revenues
Net patient service revenue	$33,500	$30,500
Other operating revenue	2,600	2,500
Total operating revenues	36,100	33,000
Expenses
Salaries and benefits	23,500	19,600
Supplies and other expenses	11,400	10,500
Depreciation	700	700
Interest	710	710
Total operating expenses	36,310	31,510
Operating income	(210)	1,490
Nonoperating revenue	6,500	1,200
Excess of revenue over expenses	$6,290	$2,690

Exhibit 4.27b Balance Sheet for Resort Hospital

Particulars	20x1	20x0
Current assets
Cash and cash equivalents	$1,500	$2,500
Net patient A/R	6,500	4,800
Inventories	400	350
Prepaid expense	350	250
Total current assets	8,750	7,900
Plant, property, and equipment
Gross plant, property, and equipment	22,000	19,500
Less Accumulated depreciation)	(12,700)	(12,000)
Net property, plant, and equipment	9,300	7,500
Long-term investments	16,500	10,500
Total assets	$34,550	$25,900
Current liabilities
Account Payable	$5,300	$3,800
Salaries payable	1,000	900
Total current liabilities	6,300	4,700
Long-term liabilities
Bonds payable	1,200	2,500
Total long-term liabilities	1,200	2,500
Net assets	27,050	18,700
Total liabilities and assets	$34,550	$25,900