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Capella Financial Statement Ratios Analysis Discussion & Worksheet

Capella Financial Statement Ratios Analysis Discussion & Worksheet

Capella Financial Statement Ratios Analysis Discussion & Worksheet

Ratio Analysis

Part One

Complete below problem on ratio analysis on Financial Management of Health Care Organizations text by Zelman, McCue, Glick, and Thomas. Using an Excel spreadsheet, calculate all the ratios listed in the problem (13 ratios for each year or 26 total for 2 years).

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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 must 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.

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 20X

Part 3

Why Ratio Analysis?

Why is ratio analysis so important in health care?

Choose a medical organization and describe at least three different ratios that you would use to assess its financial position. Explain why you selected those three ratios and how the three ratios would be used to update the CEO on the financial status of the organization.

Remember to use citations and references as appropriate. You must follow APA sixth edition style and formatting guidelines.