Cohe 6310 Health Care Accounting Assessment Answers
Answer:
Computation of Ratios (20 points each, total of 100 points plus extra credit): Refer to the partial financial statements for Regional Medical Center and the attached formulas for financial ratios. Calculate the ratios described below for the year 2011. Show your computations.
- Compute the ratio that represents the degree to which the hospital is keeping
its facilities modern and equipment technologically current ___________
Average Age of Plant = Accumulated Depreciation/Depreciation Expense (Davies and Crawford, 2011)
|
Accumulated Depreciation (Balance Sheet) 2010 |
$ 31,846,638.00 |
|
Accumulated Depreciation (Balance Sheet) 2011 |
$ 34,964,454.00 |
|
Depreciation Expenses 2010 |
$ 4,533,401.00 |
|
Depreciation Expenses 2011 |
$ 4,675,544.00 |
|
Average Age of Plant (2010) |
7.02 |
|
Average Age of Plant (2011) |
7.48 |
Days in Patient Accounts Receivable = Net Receivables/ (Net Patient Service Revenue/365)
|
|
9,929,331 | |
|
Net Receivables (2011) |
10,520,409 | |
|
Net Patient Service Revenue (2010) |
61,850,831 | |
|
Net Patient Service Revenue (2011) |
67,534,781 | |
|
Days in Patient Accounts Receivable (2010) |
58.60 |
Days |
|
Days in Patient Accounts Receivable (2011) |
56.86 |
Days |
- Compute the ratio that is the basic indicator of liquidity ___________
Current Ratio = Total Current Assets/Total Current Liabilities
|
Current Assets (2010) |
22,102,877 | |
|
Current Assets (2011) |
20,146,662 | |
|
Current Liabilities (2010) |
20,552,984 | |
|
Current Liabilities(2011) |
22,077,719 | |
|
Current ratio(2010) |
1.08 |
Times |
|
Current Ratio (2011) |
0.91 |
Times |
|
Total Operating Revenue + Other Income (2010) |
63,129,932 |
|
Total Operating Revenue + Other Income (2011) |
68,970,606 |
|
Total Assets (2010) |
82,302,173 |
|
Total Assets (2011) |
91,921,066 |
|
Total Asset Turnover (2010) |
0.77 |
|
Total Asset Turnover (2011) |
0.75 |
- Compute the ratio that measures the relationship between
long-term debt and assets owned by the organization. ___________
Long-Term Debt to Capitalization % =
(Long-Term Debt x 100)/(Long-Term Debt + Net Assets)
|
Long-Term Debt (2010) |
3,793,000 | |
|
Long-Term Debt (2011) |
2,593,125 | |
|
Net Assets (2010) |
57,956,189 | |
|
Net Assets (2011) |
67,250,222 | |
|
Long-Term Debt to Capitalization % (2010) |
6.14 |
% |
|
Long-Term Debt to Capitalization % (2011) |
5.43 |
% |
- Compute the ratio that measures profitability in relation to investment ___________
Return on Net Assets (Equity) % = 100*Excess of Revenues over Expenses/Net Assets (Brigham and Michael, 2013)
|
Excess of Revenues over Expenses (2010) |
9,154,417 |
|
Excess of Revenues over Expenses (2011) |
10,819,664 |
|
Net Assets (2010) |
57,956,189 |
|
Net Assets (2011) |
67,250,222 |
|
Return on Net Assets (Equity) % |
15.80% |
|
Return on Net Assets (Equity) % |
16.09% |
References
Brigham, F., and Michael C. 2013. Financial management: Theory & practice. Cengage Learning.
Davies, T. and Crawford, I., 2011. Business accounting and finance. Pearson.
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