What percentage of one line item is another line item? The formula is: (Line Item of Interest/Base Line Item) x 100. On the Statement of Operations, you are to calculate each line item (the Item of Interest) as a percentage of TOTAL OPERATING REVENUES(the Base Line Item). . On the Balance Shest, you are to calculate each line (the Item of Interest) as a percentage of TOTAL ASSETS (Base Line Item). . You are responsible for calculating the vertical analysis for 20XL only. PART 3 OF YOUR EXERCISE This portion of your exercise is related to calculating RATIOS: You will only be required to calculate the CURRENT RATIO, QUICK RATIO, and ACID. TEST RATIO for the YEAR 20X1. You will find the data you need to calculate the ratios in EXHIBIT 4-27b Balance Sheet for Wakeland Community Hospital, and the formulas and hints are listed below. . Find the benchmark and the desired position in the table on page 185 of your textbook. Be sure to use the correct benchmark for the size of Lake Community Hospital (310 beds). CURRENT RATIO - In calculating this ratio, be sure to use TOTAL CURRENT ASSETS and TOTAL CURRENT LIABILITIES to make your calculation. CURRENT ASSETS CURRENT LIABILITIES QUICK RATIO - In calculating this ratio, consider CASH AND CASH EQUIVALENTS to be the same as CASH+MARKETABLE SECURITIES, and NET RECEIVABLES to be the same as NET PATIENT ACCOUNTS RECEIVALBES. Be sure to use TOTAL CURRENT LIABILITIES. CASH MARKETABLE SECURITIES + NET RECEIVALBES CURRENT LIABILITIES ACID-TEST RATIO - In calculating this ratio, consider CASH AND CASH EQUIVALENTS to be the same as CASH+MARKETABLE SECURITIES, and be sure to use TOTAL CURRENT LIABILITIES CASH MARKETABLE SECURITIES CURRENT LIABILITES Net patient accounts receivables 39500 36400 Inventories 3800 4000 Other current assets 6500 5200 Total Current Assets 90300 81100 Plant, property, and equipment Gross plant, property, and equipment 215000 175500 (less accumulated depreciation) (65000)|(107000) Net property, plant and equipment 150000 68500 Funded depreciation/board-designated funds Cash and short-term investments 185000 110000 Total assets 425300259600 Current liabilities Accounts payable 14500 8500 Salaries payable 4500 3500 Notes payable 43000 4500 Total current liabilities 23300 16500 Long-term liabilities Bonds payable 60000 27500 Total long-term liabilities 60000 27500 Net assets 342000 215600 Total liabilities and net assets 425300 259600 SELECTED LIQUIDITY RATIOS FOR 20X1 WAKELAND COMMUNITY BENCHMARK DESIRED POSITION HOSPITAL 20X1 CURRENT RATIO QUICK RATIO ACID-TEST RATIO EXHIBIT 4.16a FINANCIAL RATIOS FOR ALL U.S. HOSPITALS BY BED SIZE Optum & CMS Median Ratio Hospital Industry Ratio 1-99 Beds 100-199 Beds 200-299 Beds 300-399 Beds 400+ Beds Desired Position 2.11 2.18 2.04 1.52 0.30 1.65 0.35 1.39 0.18 45 81 1.88 1.27 0.20 44 102 1.71 1.42 0.20 49 76 1.84 1.50 0.38 44 119 Above Above Above Below Above Below 86 85 45 51 56 52 $7,448 $7,197 40% $7,086 $6.494 40% $6,407 $6,112 38% $6,766 $6.260 $7,121 $6,819 38% $7,517 $7,399 Above Below Below 38% 38% 0.03 0.02 0.04 Liquidity ratios Current ratio Quick ratio Acid test ratio Days in accounts receivable Days cash on hand Average payment period, days Revenue, expense, and profitability ratios Operating revenue per adjusted discharge Operating expense per adjusted discharge Salary and benefit expense as a percentage of operating expense Operating margin Nonoperating revenue Return on total assets Return on net assets Activity ratios Total asset turnover ratio Net fixed assets turnover ratio Age of plant ratio Capital structure ratios Long-term debt to net assets ratio Net assets to total assets ratio Times interest earned ratio Debt service coverage ratio 0.04 0.03 0.03 0.04 0.08 0.05 0.04 0.08 0.04 0.05 0.04 0.09 0.04 0.07 0.05 0.10 0.04 0.08 Above Varles Above Above 0.17 0.05 0.09 1.03 1.07 2.12 10.31 1.19 2.17 1.03 2.04 0.99 2.11 11.97 2.03 1.06 2.21 11.19 Above Above Below 10.41 10.12 10.93 0.42 0.47 0.21 0.54 3.78 3.18 0.18 0.58 3.47 3.51 031 0.51 3.43 3.63 0.38 0.52 4.43 636 0.59 0.48 5.13 Below Above Above Above 3.64 3.50 the 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 Almana of He perating indicators. 2011/2010 median value data. The quick and test and salary and benefit expense as a percentage of operating expense ratios were obtained from 2010 CMS 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 of DINANCIAL STATEMENT CAPE KELAND COMMUNITY EXHIBIT 2 STATEMENT OF OPERATIONS FOR WAKELAND HOSPITAL Wakeland Community Hospital Statement of Operations for the Years Ended December 31 20X1 and 20x0 (in thousands) 20X1 20 Revenues Net patient service revenue Other operating revenue Total operating revenues $225,000 6,400 231,400 $210,00 5 215,701 110,16 61,000 Operating expenses Salaries and benefits Supplies and other expenses Depreciation Interest Total operating expenses 124,173 85,000 12,000 4,500 225,673 184.95 30.733 Income from operations 5,727 Nonoperating income Investment income/contributions 7,500 Excess of revenue over expenses 3928 13,227 Net income $39.28 $13,227 EXHIBIT 4.27b BALANCE SHEET FOR WAKELAND COMMUNITY HOSPITAL Wakeland Community Hospital Balance Sheet December 31, 20X1 and 20xo (in thousands) 20X0 20X1 Current assets Cash and cash equivalents Net patient accounts receivables Inventories Other current assets Total current assets $40,500 39,500 3,800 6,500 90,300 $35,500 36,400 4,000 5,200 81,100 Plant, property, and equipment Gross plant, property, and equipment (Less accumulated depreciation) Net property, plant, and equipment Funded depreciation/board-designated funds Cash and short-term investments 215,000 (65,000) 150,000 175,500 (107,000) 68,500 185,000 110,000 $425,300 $259,600 Total assets Current liabilities Accounts payable Salaries payable Notes payable Total current liabilities $14,500 4,500 4,300 23,300 $8,500 3,500 4,500 16,500 Long-term liabilities Bonds payable Total long-term liabilities 60,000 60,000 27,500 27,500 Net assets 342,000 215,600 Total liabilities and net assets $425,300 $259,600