Financial ratio analysis | Business & Finance homework help

1. Current Ratio

2008: 1.90

2009: 1.69

Comment: 1.9 is in good agreement with HCIA/HCFA value of 1.95 for a 100-249 bed hospital. However, from 1996-1997, there is a decrease to 1.69, suggesting concern that asset increase did not keep up with increase in liabilities.

2. Days in accounts receivable

2008: 101.9

2009: 71.29

The HCIA/HCFA average is 66. Both 1996 and 1997 are high, but there is a clear decreasing trend in ’97, which is favorable

3. Days cash on hand:

2008: 27.2

2009 23.71

The HCIA/HCFA standard is 47 Both 1997 and 1996 are low, and the trend to 1997 is decreasing and is a concern about cash flow problems.

4. Times interest earned

2008: 4.70

2009: 1.395

The HCIA/HCFA average is 4.29. In 1996, the ratio was excellent at 4.70. However, in 1997 the ratio decreased significantly.

5. Debt service coverage

2008: 5.64

2009: 3.62

HCIA/HCFA value is 3.35 for a 1-99 bed hospital-both figures are well above standard, but there is a decreasing trend. Concern is whether the trend would continue and debt service capability would be jeopardized.

6. Total asset turnover

2008: 0.685

2009: 0.7164

The HCIA/HCFA value is 1.02 for a 1-99 bed hospital. Both values are low, but there is a slight upward trend in ’97.

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