This same principle is applied to business. The financial information can be obtained from a health care organization by reviewing their financial statements, as we discussed in Week 1. Financial statements can tell a lender if the organization is making enough money (revenue) to afford the debt associated with a loan.

Review the financial ratios discussed in "A Further Look at Financial Statements," and  "Reporting and Analyzing Inventory," ofAccounting.

Select 1 of the following financial ratios listed below to use for this discussion:

• Current ratio
• Debt to asset ratio
• Free cash flow ratio
• Price-earnings ratio
• Profit margin ratio
• Return on total assets ratio
• Working capital ratio

Use your selected financial ratio and respond to the following

Explain how the financial ratio you selected is calculated.

• Explain why a financial institution or investor would use the financial ratio.
• Explain what the result of the financial ratio calculation would tell you about the organization's financial status.
• Give an example of how you would use 1 of the financial ratios in your personal finances or current profession.