Bayside Memorial Hospital's financial statements are presented in Exhibits 13.1, 13.2, and 13.3.

a.  Calculate Bayside's financial ratios for 2013. Assume that Bayside had $1 million in lease

  payments and $1.4 million in debt principal repayments in 2013. (Hint: Use the book discussion

  to identify the applicable ratios.)

b.  Interpret the ratios. Use both trend and comparative analysis. For the comparative analysis,

  assume that the industry average data presented in the book is valid for both 2013 and 2014.

2014 Industry

Profitability ratios:

Total margin = Net income / Total revenues 7.5% 5.0%

Return on assets = Net income / Total assets 5.7% 4.8%

Return on equity = Net income / Total equity 8.0% 8.4%

Liquidity ratios:

Current ratio = Current assets / Current liabilities 2.3 2.0

Days cash on hand =        Cash + Marketable securities         22.5 30.6

                       (Expenses - Depreciation / 365)

Debt management ratios:

Debt ratio = Total debt / Total assets 29.0% 42.3%

Debt to equity ratio = Total debt / Total equity 40.9% 73.3%

TIE ratio = EBIT / Interest expense 6.6 4.0

CFC ratio =      EBIT + Lease payments + Depreciation expense      3.2 2.3

           Interest expense + Lease payments + Debt principal / (1-T)

Asset management ratios:

Fixed asset turnover = Total revenues / Net fixed assets 0.95 2.20

Total asset turnover ratio = Total revenues / Total assets 0.75 0.97

Days in patient accounts receivable =  Net patient accounts receivable 77.3 64.0

                            Net patient services revenue / 365

Average age of plant = Accumulated depreciation 6.1 9.1

                  Depreciation expense

pur-new-sol

Related Questions