***INSTRUCTIONS***

Assignment: Ratio Analysis

Unit Outcomes addressed in this assignment:

Define and understand the importance of working capital.

Identify the sources of working capital.

Course Outcome addressed in this assignment:

HA520-2: Determine how financial management concepts are used to achieve organizational goals in health

***DIRECTIONS***

Instructions:

Review the “Ratio Analysis Practice Problem” to understand how ratios were calculated with 2019 data. Then, using the financial statements for Bobcat Hospital in Chapter 3, calculate the following ratios for 2020:

Current ratio

Collection period ratio

Days cash on hand, all sources, ratio

Days cash on hand, short-term sources, ratio

Average payment period ratio

Operating margin ratio

Total margin ratio

Return on net assets ratio

Total asset turnover ratio

Average age of plant ratio

Fixed asset turnover ratio

Current asset turnover ratio

Inventory turnover ratio

Net asset financing ratio

Long-term debt to capitalization ratio

Debt service coverage ratio cash flow to debt ratio

Indicate whether each 2020 ratio is better or worse than the 2019 ratio.

Indicate whether the 2020 ratios are better or worse than the benchmarks using the Optum medians for each ratio (see exhibit 3.5 in the text).

Examine the 2019 and 2020 ratios and assess the hospital’s financial performance. Is the hospital in better or worse financial shape in 2020 as compared to 2019?

If you were COO of Bobcat Hospital, how would you use this ratio data to make decisions for 2021?

Details: Use Excel or a table in Word to organize your answers. Use a combination of numerical and narrative answers.

Submit your assignment to the Unit 4 Assignment Dropbox.

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