Exhibit 1 shows the statement of operations and balance sheet for Louisville Com
ID: 2752753 • Letter: E
Question
Exhibit 1 shows the statement of operations and balance sheet for Louisville Community Hospital for the years ended 20x0 and 20x1.
Compute the following ratios for both years: quick, current, acid test, days in accounts receivable, days cash on hand, average payment period, operating revenue per adjusted discharge operating expense per adjusted discharge, salary and benefit expense as a percentage of total operating expense, operating margin, non-operating revenue, return on total assets and net assets, total asset turnover, fixed asset turnover, age of plant, long term debt to net assets, and net assets to total assets.
Comment on the hospital’s liquidity; efficient use of assets; expense; profitability; and capital expense citing at least one ratio per category. Use the national hospital industry benchmarks listed in exhibit 3 for 125 bed hospitals and assume that Louisville’s discharges were 3,100 for 20x0 and 3,300 for 20x1.
Explanation / Answer
Ratios 20x1 20x0
Quick ratio (5650-950)/3400 = 1.38 5250-750/2750=1.63
Current 5650/3400=1.66 5250/2750= 1.91
Acid-test 1.66 1.91
Days in Accounts receivable 57.03 73.74
Days cash on hand 700/(22700-18000)/365= 57 500(17100-17000)/365 = 1825
Average Payment period 3400/(22700-18000)/365 = 276 2750/(17100-17000)365=10,038
operating revenue per adjusted discharge
24000/3300=7.30 19800/3100 = 6.40
operating expense per adjusted discharge 22700/3300=6.88 17100/3100 = 5.52
salary and benefit expense as a percentage of total operating expense
13000/22700=0.57 9000/17100=0.53
operating margin 1300/24000 =0.054 2700/19800=.136
non-operating revenue
4000/24000 = 0.167
2500/19800=0.126
return on total assets
5300/32150 =-0.165 5200/21250=0.245
return on net assets
5300/22250=0.24 5200/10500=0.50
total asset turnover
0.75 0.93
fixed asset turnover
2.82 2.83
age of plant
7.20 8.50
long term debt
Ratios 20x1 20x0
Quick ratio (5650-950)/3400 = 1.38 5250-750/2750=1.63
Current 5650/3400=1.66 5250/2750= 1.91
Acid-test 1.66 1.91
Days in Accounts receivable 57.03 73.74
Days cash on hand 700/(22700-18000)/365= 57 500(17100-17000)/365 = 1825
Average Payment period 3400/(22700-18000)/365 = 276 2750/(17100-17000)365=10,038
operating revenue per adjusted discharge
24000/3300=7.30 19800/3100 = 6.40
operating expense per adjusted discharge 22700/3300=6.88 17100/3100 = 5.52
salary and benefit expense as a percentage of total operating expense
13000/22700=0.57 9000/17100=0.53
operating margin 1300/24000 =0.054 2700/19800=.136
non-operating revenue
4000/24000 = 0.167
2500/19800=0.126
return on total assets
5300/32150 =-0.165 5200/21250=0.245
return on net assets
5300/22250=0.24 5200/10500=0.50
total asset turnover
0.75 0.93
fixed asset turnover
2.82 2.83
age of plant
7.20 8.50
long term debt to net assets
0.29 0.76
assets to total assets
0.69 0.49
Ratios 20x1 20x0
Quick ratio (5650-950)/3400 = 1.38 5250-750/2750=1.63
Current 5650/3400=1.66 5250/2750= 1.91
Acid-test 1.66 1.91
Days in Accounts receivable 57.03 73.74
Days cash on hand 700/(22700-18000)/365= 57 500(17100-17000)/365 = 1825
Average Payment period 3400/(22700-18000)/365 = 276 2750/(17100-17000)365=10,038
operating revenue per adjusted discharge
24000/3300=7.30 19800/3100 = 6.40
operating expense per adjusted discharge 22700/3300=6.88 17100/3100 = 5.52
salary and benefit expense as a percentage of total operating expense
13000/22700=0.57 9000/17100=0.53
operating margin 1300/24000 =0.054 2700/19800=.136
non-operating revenue
4000/24000 = 0.167
2500/19800=0.126
return on total assets
5300/32150 =-0.165 5200/21250=0.245
return on net assets
5300/22250=0.24 5200/10500=0.50
total asset turnover
0.75 0.93
fixed asset turnover
2.82 2.83
age of plant
7.20 8.50
long term debt to net assets
0.29 0.76
assets to total assets
0.69 0.49
Ratios 20x1 20x0
Quick ratio (5650-950)/3400 = 1.38 5250-750/2750=1.63
Current 5650/3400=1.66 5250/2750= 1.91
Acid-test 1.66 1.91
Days in Accounts receivable 57.03 73.74
Days cash on hand 700/(22700-18000)/365= 57 500(17100-17000)/365 = 1825
Average Payment period 3400/(22700-18000)/365 = 276 2750/(17100-17000)365=10,038
operating revenue per adjusted discharge
24000/3300=7.30 19800/3100 = 6.40
operating expense per adjusted discharge 22700/3300=6.88 17100/3100 = 5.52
salary and benefit expense as a percentage of total operating expense
13000/22700=0.57 9000/17100=0.53
operating margin 1300/24000 =0.054 2700/19800=.136
non-operating revenue
4000/24000 = 0.167
2500/19800=0.126
return on total assets
5300/32150 =-0.165 5200/21250=0.245
return on net assets
5300/22250=0.24 5200/10500=0.50
total asset turnover
0.75 0.93
fixed asset turnover
2.82 2.83
age of plant
7.20 8.50
long term debt to net assets
0.29 0.76
assets to total assets
0.69 0.49
to net assets
0.29 0.76
assets to total assets
0.69 0.49
Quick ratio
(CA-Inventory)/C.liabilities
Current CA/CL
Acid-test CA/CL
Days in Accounts receivable 365/A/R Turnover
Days cash on hand Cash+investment/operating exp-Dep and Amort)/365
Average Payment period CL/Opeating exp -Dep and Amort)/365
operating revenue per adjusted discharge operating expense per adjusted discharge
Total operating revenues/Adjusted discharge
operating expense per adjusted discharge
Total operating expenses/ discharge
salary and benefit expense as a percentage of total operating expense
Total Salary and benefit exp/Total operating exp
Operating Margin
Operating income/total operating revenues
non-operating revenue non-operating revenue/Total operating revenue
return on total assets Excess of revenues over expenses/ Total assets
return on net assets Excess of revenues over expenses/ Net assets
total asset turnover Total operating revenues/Total Assets
fixed asset turnover Total operating revenues/Net P&E
age of plant Accumulated Dep/Dep exp
long term debt to net assets Long term debt/Net assets
assets to total assets Net assets/Total assets
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