22. a) Calculate the financial ratios below for 20X1. - Ratios for 20X0 are show

Q: 22. a) Calculate the financial ratios below for 20X1. - Ratios for 20X0 are show

Financial Ratios Calculation $ Liquidity Ratios Current Ratio Current Assets/Current Liabilities 2.70 Days in Accounts Receivable Receivables x Months or days in a year / Net Credit Sales for the year 59 Days Cash on Hand Cash on hand / [(Operating expenses - Non cash expenses) / 365] 32.37

ID: 2729542 • Letter: 2

Question

22. a) Calculate the financial ratios below for 20X1.

- Ratios for 20X0 are shown so that you can check the formulas you use

- Note that dollar amounts on the Balance Sheet and Statement of Operations are stated in thousands (the final 3 zeroes are omitted). In the text of the problem, however, annual debt Principal Payments and numbers of Adjusted Discharges are not stated in thousands (that is, no zeroes are omitted).

Ratios

20X0

Liquidity Ratios

Current Ratio

3.06

Days in Accounts Receivable

Days Cash on Hand

208

Average Payment Period (Days)

Revenue, Expense, & Profitability Ratios

Operating Revenue per Adjusted Discharge

$7,993

Operating Expense per Adjusted Discharge

$7,659

Salary & Benefit Exp. as % of Operating Exp.

63%

Operating Margin

0.04

Return on Net Assets

0.21

Activity Ratios

Total Asset Turnover Ratio

0.99

Age of Plant

7.11

Capital Structure Ratios

Long-Term Debt to Net Assets

1.98

Net Assets to Total Assets

0.30

Debt Service Coverage Ratio

2.21

b) Using the ratios for 20X0 and 20X1, evaluate the financial status of Island Regional Medical Center. Be sure to comment on its liquidity, profitability, activity, capital structure, and overall financial condition.