Week 4 Checkpoint -- Ratio Analysis

Week 4 Checkpoint -- Ratio Analysis - the hospitals...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Week 4 Checkpoint: Ratio Analysis Arcadia Hospital’s current ratio is: 6900/3200 = 2.2 Arcadia Hospital’s current total asset is: 5681/17900 = 0.03 Since Arcadia’s current ratio is above the median average of 2.07 they have a larger amount of cash on hand and marketable securities. With their current total asset being 0.03 they are well below the average of 1.01 which means that their revenue generation is fairly poor from their asset base. Arcadia Hospital’s asset/equity: 17900/7900 = 2.27 Arcadia Hospital’s long-term debt/equity: 10000/7900 = 1.26 Arcadia Hospital’s total margin: 32/568 = 5.63 Asset/equity and long-term debt/equity are called leverage ratios. Asset/equity is known as a capital structure. The choice between the mix of equity and debt financing will determine
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: the hospitals financial structure. The long-term debt/equity is coverage that gives the hospital the choice of how much interest they want to pay out. The hospitals cash flow in and out will determine which interest obligations are met and which are not. The total margin is known as a profitability ratio that shows the amount of profit earned from each dollar. The total margin gives information about the hospitals ability to keep their unit prices up, but does not give information on the hospitals ability to generate any kind of economic return. The asset/equity ratio above 1.0 shows that the hospital is actually in debt and that each dollar of the hospitals equity controlled $2.27 of its total assets....
View Full Document

Page1 / 2

Week 4 Checkpoint -- Ratio Analysis - the hospitals...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online