Assignment 2.2: Ratio Analysis

Assignment 2. 2: Ratio Analysis Name| | Part 1: Enter the information based on your computations. | 2011| 2010| Benchmark| Favorable (F), Unfavorable (U), or Approximate (A)? 2011/2010| 1. Current ratio | 3. 52| 2. 59| 2. 00| Favorable| 2. Days cash on hand| 27. 64| 18. 10| 15. 00| Favorable| 3. Days in A/R| 69. 32| 76. 59| 45. 00| Favorable| 4. Operating margin | 2. 18%| 3. 03%| 4%| Unfavorable| 5. Return on total assets | 5. 08%| 7. 13%| 4%| Unfavorable| 6. Return on net assets | 14. 54%| 17. 76%| 10%| Unfavorable| 7. Debt to capitalization| 61. 21%| 53. 69%| 50%| Unfavorable| 8.

Times interest earned | 2. 47| 3. 36| 4. 00| Unfavorable| 9. Debt service coverage | 1. 28| 1. 30| 2. 00| Approximate| 10. Fixed asset turnover | 3. 28| 2. 88| 3. 00| Favorable| 11. Salary and benefit/NPSR| 84. 08%| 82. 82%| 55%| Unfavorable| 1. Current ratio = Total Current Assets in Balance Sheet / Total Current Liabilities in Balance Sheet 2011| 2010| $54,306/$15,425| $39,715/$15,315| 3. 52| 2. 59 | 2. Days Cash on Hand = Cash and Cash Equivalents from Balance Sheet / [(Total Expenses – Depreciation – Provision for Bad Debts in Statement of Operations) / 365] 011| 2010| $12,102/[($168,232 – $6,405 – $2,000)/365]| $6,486/[($138,394 – $5,798 – $1,800)/365]| $12,102/[$159,827/365]| $6,486/[$130. 796/365]| $12,102/437. 88| $6,486/358. 34| 27. 64| 18. 10| 3. Days in A/R = Net Patient Accounts Receivable in Balance Sheet / (Net Patient Service Revenue in Statement of Operations / 365) 2011| 2010| $28,509/($150,118/365)| $25,927/$123,565/365)| $28,509/411. 28| $25,927/338. 53| 69. 32| 76. 59| 4. Operating margin = Operating Income from Statement of Operations / Total Revenues in Statement of Operations 2011| 2010| 3,747/$171,979| $4,330/$142,724| .0218 x 100| . 0303 X 100| 2. 18%| 3. 03%| 5. Return on total assets = Net Income in Statement of Operations / Total Assets in Balance Sheet 2011| 2010| $7,860/$154,815| $8,206/$115,101| .0508 x 100| . 0713 x 100| 5. 08%| 7. 13%| 6. Return on net assets = Net Income in Statement of Operations / Net Assets in the Balance Sheet 2011| 2010| $7,860/$54,068| $8,206/$46,208| .1454 x 100| . 1776 x 100| 14. 54%| 17. 76%| 7. Debt to capitalization = Long-term Debt in Balance Sheet / Long term debt + Net Assets in Balance Sheet 2011| 2010| 85,322/($85,322 + $54,068)| $53,578/($53,578 + $46,208)| $85,322/$139,390| $53,578/$99,786| .6121 x 100| . 5369 x 100| 61. 21%| 53. 69%| 8. Times interest earned = (Net Income + Interest) in Statement of Operations / Interest in Statement of Operations 2011| 2010| ($7,860 + $5,329)/$5,329| ($8,206 + $3,476)/$3,476| $13,189/$5,329| $11,682/$3,476| 2. 47| 3. 36| 9. Debt service coverage = (Net Income + Interest + Depreciation) in Statement of Operations/ Interest + Principal Payments ($10 million assumed for this assignment) 2011| 2010| ($7,860 + $5,329 + $6. 05)/$15,329| ($8,206 + $3,476 + $5,795)/$13,476| $19,594/$15,329| $17,477/$13,476| 1. 28| 1. 30| 10. Fixed asset turnover = Total Revenues in Statement of Operations / Net Property and Equipment 2011| 2010| $171,979/$52,450| $142,724/$49,549| 3. 28| 2. 88| 11. Salary and benefits as a % of net patient revenue = Salaries and Benefits in Statement of Operations / Net Patient Service Revenue in Statement of Operations 2011| 2010| $126,223/$150,118| $102,334/$123,565| .8408 X 100| . 8282 x 100| 84. 08%| 82. 82%| Part 2: Type your memo to senior management below