Hospital financial ratio analysis

Ratio Analysis Part One Complete problem 13 on ratio analysis on page 188 of your Financial Management of Health Care Organizations text by Zelman, McCue, Glick, and Thomas. Using an Excel spreadsheet, calculate all of the ratios listed in the problem (13 ratios for each year or 26 total for 2 years). Part Two Use your answers from part one to complete the following: • • • • Conduct a strategic assessment based on the health care data presented for Longwood Community Hospital. Analyze the 26 financial ratios calculated for the hospital to state its financial position. Develop a perspective on long-term financial trends for the hospital. Assess the potential financial impact on the hospital's organizational strategy and potential implications on patient care based on the benchmark data provided. Write a 3–5-page paper based on the above. Submission Requirements Your paper should meet the following requirements: • Written communication: Your document should clearly identify where each grading criteria or part of the assignment is addressed by using APA-formatted headings and subheadings. Your writing needs to communicate professionally, with correct English usage. Your points need to be logical, substantive, and relevant based on the • • • evidence presented. In addition, your communication should be free of errors that detract from the overall message. APA formatting: Resources and citations are formatted according to APA sixth edition style and formatting. Documents to be submitted: You need to submit the following: ▪ Spreadsheets. ▪ Word document: 3–5 pages with APA-formatted headings and subheadings. Font and font size: Arial, 10 point. 13. Ratio analysis. The statement of operations and balance sheet for Longwood Community Hospital for the years ended 20X0 and 20X1 are shown in Exhibits 4.19a and 4.19b. Compute the following ratios for both years: current, acid test, days in accounts receivable, average payment period, long-term debt to net assets, net assets to total assets, total asset turnover, fixed asset turnover, operating revenue per adjusted discharge, operating expense per adjusted discharge, salary and benefit expense as a percentage of total operating expense, return on total assets, and operating margin. After calculating the ratios, comment on Longwood's liquidity; efficient use of assets or activity ratios; revenue, expense, and profitability; and capital structure relative to its industry benchmarks for its respective bed size (listed in Exhibit 4.16a). Cite at least two meaningful ratios per category. Assume for this analysis that Longwood is a 350-bed facility and its adjusted discharges were 5,500 for 20X0 and 5,400 for 20X1. (Zelman 190-192) Zelman, William N., Michael McCue, Noah Glick, Marci Thomas. Financial Management of Health Care Organizations: An Introduction to Fundamental Tools, Concepts and Applications, 4th Edition. JosseyBass, 2013-12-30. VitalBook file Exhibit 4.19a Exhibit 4.19b Exhibit 4.16a Exhibit 4-16a Financial ratios for all U.S. hospitals by bed size s by bed size Ratio Liquidity ratios Current ratio Quick ratio Acid test ratio Days in accounts receivable Days cash on hand Average payment period, days Revenue, expense and profitability ratios Operating revenue per adjusted discharge Operating expense per adjusted discharge Salary and benefit expense as a percentage of operating expense Operating margin Non-operating revenue Return on total assets Return on net assets Activity ratios Total asset turnover ratio Net fixed assets turnover ratio Age of plant ratio Capital structure ratios Long-term debt to net assets ratio Net assets to total assets ratio Times interest earned ratio Debt service coverage ratio a All ratio values, except for quick, acid test, and salary & benefit expense as a percentage of opera Optum Insight "2013 Almanac of Hospital Financial and Operating Indicators" 2011/2010 median v The quick, acid test, and salary & benefit expense as a percentage of operating expense ratios wer b These are true to a certain point. For example, in general the higher the better for the current rat the organization might be better off investing some of the excess cash.