Use the results of your ratio analysis to classify the derived ratios as favorable or unfavorable as to trend and standard. Be prepared to answer variants of the questions below. Justify your answers based upon the results of the ratio analysis by citing ratio(s), your comparisons of results against standards, and your interpretations of trends.

1. Is Stevens Hospital profitable?

2. Does the hospital use its assets to generate revenue efficiently?

3. Does Stevens Hospital have a problem with its long-term debt posture? If you were a mortgage lender, would you lend money to Stevens Hospital?

4. Can Stevens Hospital meet its current liabilities?

5. If you were a medical supplier, would you sell to this hospital on credit?

6. Does Stevens Hospital have a problem with revenue cycle management?

7. Interpret the difference between the values for Total Margin% and Operating Margin %.

8. Stevens Hospital is the public hospital for District No. 2 of Snohomish County, Washington. As such a significant portion of the nonoperating revenues listed in the Income Statement are generated by taxes. Discuss the advantages and disadvantages of being supported by taxes.

Stevens Hospital Ratio Analysis \begin{tabular}{|c|c|c|c|c|c|} \hline \multirow[t]{2}{*}{ Indicator } & \multicolumn{2}{|c|}{ Ratio Computations } & \multirow{3}{*}{IndustryStandardsS&P"A"RatedHosp} & \multirow{3}{*}{ Trend } & \multirow{3}{*}{ Standard } \\ \hline & 2008 & 2007 & & & \\ \hline \multicolumn{2}{|l|}{ Profitability } & & & & \\ \hline Total Margin \% & 3.21 & 1.68 & N/A & F & N/A \\ \hline Excess margin % & 3.29 & 1.73 & 3.70% & F & U \\ \hline Operating margin % & 0.88 & (1.02) & N/A & F & N/A \\ \hline Return on net assets (equity) % & 18.92 & 11.41 & 4.70% & F & F \\ \hline \multicolumn{6}{|l|}{ Liquidity } \\ \hline Current ratio & 1.23 & 1.34 & 2.08 & U & U \\ \hline Days in Patient Accounts Receivable & 50.71 & 60.64 & 59.20 & F & F \\ \hline & & & & & \\ \hline Days cash on hand, short-term sources & 23.85 & 23.07 & 23.80 & F & F \\ \hline Days cash on hand, all sources & 40.94 & 31.53 & 104.60 & F & U \\ \hline Average payment period & 85.93 & 70.09 & 47.50 & U & U \\ \hline \multicolumn{6}{|l|}{ Capital Structure (Debt Management) } \\ \hline Net asset financing % & 28.86 & 23.22 & 59.50% & F & U \\ \hline Long-term debt to capitalization of & 47.29 & 63.11 & 28.30% & F & 4 \\ \hline & & & & & \\ \hline Debt service coverage & 1.60 & 1.74 & 5.14 & U & U \\ \hline Cash flow to debt % & 18.50 & 13.13 & 19.50% & F & U \\ \hline \multicolumn{6}{|l|}{ Asset Efficiency (Activity) } \\ \hline Total Asset Turnover & 1.70 & 1.58 & 0.90 & F & F \\ \hline & & & & & \\ \hline Fixed Asset Tumover & 4.25 & 3.79 & 1.78 & F & F \\ \hline Ourrent Asset Tumover & 3.72 & 4.11 & 3.89 & U & U \\ \hline Average Age of Plant & N/A & N/A & 8.09 & N/A & N/A \\ \hline Inventory Tumover & 66.44 & 63.57 & 77.85 & F & U \\ \hline \end{tabular}