Introduction
In this assignment, you will perform ratio analysis using the balance sheet for XYZ Hospital. Use the Assignment 5.1: Ratio Analysis Document (Word)
Download Assignment 5.1: Ratio Analysis Document (Word) to record your responses.
Assignment Guidelines
Instructions
- Review the following table:
| XYZ Hospital Balance Sheet December 31, 20xx | ||
| Description | Amount | |
| Current Assets | Cash and investments (savings/checking) | $80,000 |
| Patient revenue (money owed to hospital) | $472,000 | |
| Inventory (on the shelf) | $16,400 | |
| Subtotal | $568,400 | |
| Less | ||
| Bad debt | ($57,200) | |
| Charitable allowance | ($14,100) | |
| Contractual allowance | ($269,300) | |
| Subtotal | ($340,600) | |
| Total Current Assets | $227,800 | |
| Fixed Assets | Land | $29,000 |
| Buildings (plant) | $805,000 | |
| Equipment | $610,000 | |
| Construction in progress | $37,000 | |
| Total Fixed Assets | $1,481,000 | |
| Less accumulated depreciation | ($880,800) | |
| Net Fixed Assets | $600,200 | |
| Total Assets | $828,000 | |
| Current Liabilities | Accounts payable salaries, supplies, pharmaceutical | $36,560 |
| Accrued compensation and benefits | $10,900 | |
| Accrued liabilities (interest, physician contracts) | $10,870 | |
| Total Current Liabilities | $58,330 | |
| Debt | Long-term debt | $38,000 |
| Short-term debt | $2,100 | |
| Total Debt | $40,100 | |
| Total Liabilities (Total Current Liabilities + Debt) | $98,430 | |
| Net Worth (Assets − Liabilities) | $729,570 | |
| Total Liabilities and Net Worth | $828,000 | |
Download Assignment 5.1: Ratio Analysis Document (Word) to record your answers to the following prompts based on the information provided in the table:
- Calculate the current ratio, quick ratio, and debt ratio.
- What information do each of these ratios provide?
- For each of the three ratios, give one way each ratio could be positively impacted.
- For each of the three ratios, give one way each ratio could be negatively impacted.
- For each ratio you calculated above, does the value of the ratio indicate a good or poor financial situation for this organization? Explain your conclusion for each of the ratios.
