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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