Question
You have been hired as a Financial Manager for Bokamoso Hospital and your team is working on an independent assessment of a Dinokwe Hospital whom
You have been hired as a Financial Manager for Bokamoso Hospital and your team is working on an independent assessment of a Dinokwe Hospital whom the shareholders are considering to invest in. Dinokwe hospital is a hospital that specialises in Ear Nose and Throat ENT treatments and surgery. Your assistant has provided you with the following data for Dinokwe Hospital and their industry. Ratio 1999 1998 1997 1999- Industry Average Long-term debt 0.45 0.40 0.35 0.35 Inventory Turnover 62.65 42.42 32.25 53.25 Depreciation/Total Assets 0.25 0.014 0.018 0.015 Days'sales in receivables 113 98 94 130.25 Debt to Equity 0.75 0.85 0.90 0.88 Profit Margin 0.082 0.07 0.06 0.075 Total Asset Turnover 0.54 0.65 0.70 0.40 Quick Ratio 1.028 1.03 1.029 1.031 Current Ratio 1.33 1.21 1.15 1.25 Times Interest Earned 0.9 4.375 4.45 4.65 Equity Multiplier 1.75 1.85 1.90 1.88 a. In the annual report to the shareholders, the CEO of Dinokwe Hospital, "1997 was a good year for the hospital with respect to our ability to meet our short-term obligations. We had higher liquidity largely due to an increase in highly liquid current assets (cash, account receivables and short-term marketable securities)." Is the CEO correct? Explain and use only relevant information in your analysi
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started