Using the information presented in the Financial Statements of United Health Care, a major HMO, compute financial ratios for 2016 and 2017 and discuss some of the primary observations that you would conclude regarding the financial performance of the firm. Provide an overall evaluation of the financial position of this company.

United Healthcare Financial Ratios

Health Plan Median 2017 2016 2015

Liquidity

Current 1.32 ? ? .93

Days in Receivables 22.5 ? ? 19.8

Days Cash on Hand 89.9 ? ? 53.6

Capital Structure

Equity Financing % 48.9 ? ? 60.7%

Long Term Debt to Equity % 13.0 ? ? 3.67%

Cash Flow to Total Debt % 15.0 ? ? 37.7%

Times Interest Earned 13.1 ? ? 109.5

Activity

Total Asset Turnover 1.55 ? ? 1.74

Fixed Asset Turnover 16.8 ? ? 24.6

Current Asset Turnover 2.88 ? ? 5.07

Profitability

Total Margin % 3.6 ? ? 6.81

Return on Equity % 11.6 ? ? 19.6

Income Statement (000$)

Fiscal Year Ending 12/31/17 12/31/16 12/31/15

Net sales 5,670,878 3,768,882 3,115,202

Cost of goods 3,930,933 2,643,107 2,236,588

Gross profit 1,739,945 1,125,775 878,614

Selling, general and administration 1,030,906 555,649 491,635

Income before depreciation and 709,039 570,126 386,979

amortization

Depreciation and amortization 94,458 64,079 50,628

Nonoperating income -153,796 -35,940 122

Interest expense 771 2,163 3,046

Income before taxes 460,014 467,944 333,427

Provision for income tax 170,205 177,822 119,379

Minority interest 3,845 1,983 1,970

Net income before extraordinaries 285,964 288,139 212,078

Extraordinary items and discounted

Operations NA 1,377,075 NA

Net income 285,964 1,665,214 212,078

United Healthcare Corporation Balance Sheet (Data in Thousands)

Fiscal Year Ending 12/31/17 12/31/16 12/31/15

Assets

Cash 940,110 1,519,049 228,260

Marketable securities 863,815 135,287 172,610

Receivables 550,313 167,369 169,075

Other current assets 512,883 86,510 44,023

Total current assets 2,867,121 1,908,215 613,968

Prop. Plant, Equipment 417,166 273,431 215,628

Less Accumulated Depreciation 149,514 110,834 88,886

Net Prop and Equipment 267,652 162,597 126,742

Investment in Subsidiaries 1,274,470 1,115,054 768,563

Intangibles 1,751,743 303,613 278,081

Total assets 6,160,986 3,489,479 1,787,354

Liabilities

Accounts payable 1,236,217 470,591 535,863

Accrued expenses 566,770 122,993 52,027

Other current liabilities 631,009 70,718 70,844

Total current liabilities 2,433,996 664,302 658,734

Noncurrent capital leases 38,970 29,721 39,099

Total Liabilities 2,472,966 694,023 697,833

Preferred stock 500,000 NA NA

Common stock net 1,752 1,728 1,691

Capital surplus 822,429 752,472 659,359

Retained earnings 2,358,640 2,085,056 424,468

Other equities 5,199 -43,800 -108

Shareholders equity 3,688,020 2,795,456 1,085,410

Total liability and net worth 6,160,986 3,489,479 1,783,243