Assignment 6.2: Ratio Analysis
Instructions:
1. Review the following table:
XYZ Hospital
Balance Sheet
December 31, 20xx
Description Amount
Current Assets Cash and investments
(savings/checking)
$80,000
Patient revenue (money owed to
hospital)
$472,000
Inventory (on the shelf) $16,400
Subtotal $568,400
Less
Bad debt ($57,200)
Charitable allowance ($14,100)
Contractual allowance ($269,300)
Subtotal ($340,600)
Total Current Assets $227,800
Fixed Assets Land $29,000
Buildings (plant) $805,000
Equipment $610,000
Construction in progress $37,000
Total Fixed Assets $1,481,000
Less accumulated depreciation ($880,800)
Net Fixed Assets $600,200
Total Assets $828,000
Current Liabilities Accounts payable salaries, supplies,
pharmaceutical
$36,560
Accrued compensation and benefits $10,900
Accrued liabilities (interest, physician
contracts)
$10,870
Total Current Liabilities $58,330
Debt Long-term debt $38,000
Short-term debt $2,100
Total Debt $40,100
Total Liabilities (Total Current
Liabilities + Debt)
$98,430
Net Worth (Assets − Liabilities) $729,570
Total Liabilities and Net Worth $828,000
Instructions:
1. Review the following table:
XYZ Hospital
Balance Sheet
December 31, 20xx
Description Amount
Current Assets Cash and investments
(savings/checking)
$80,000
Patient revenue (money owed to
hospital)
$472,000
Inventory (on the shelf) $16,400
Subtotal $568,400
Less
Bad debt ($57,200)
Charitable allowance ($14,100)
Contractual allowance ($269,300)
Subtotal ($340,600)
Total Current Assets $227,800
Fixed Assets Land $29,000
Buildings (plant) $805,000
Equipment $610,000
Construction in progress $37,000
Total Fixed Assets $1,481,000
Less accumulated depreciation ($880,800)
Net Fixed Assets $600,200
Total Assets $828,000
Current Liabilities Accounts payable salaries, supplies,
pharmaceutical
$36,560
Accrued compensation and benefits $10,900
Accrued liabilities (interest, physician
contracts)
$10,870
Total Current Liabilities $58,330
Debt Long-term debt $38,000
Short-term debt $2,100
Total Debt $40,100
Total Liabilities (Total Current
Liabilities + Debt)
$98,430
Net Worth (Assets − Liabilities) $729,570
Total Liabilities and Net Worth $828,000
2. Complete the following based on information provided in the table:
a. Calculate the current ratio, quick ratio, and debt ratio.
b. What information do each of these ratios provide?
c. For each of the three ratios, give one way each ratio could be positively impacted.
d. For each of the three ratios, give one way each ratio could be negatively impacted.
e. When assessing the results of these ratios, what advice would you have for this
organization if it was considering securing financing for a major capital expense
d. For each of the three ratios, give one way each ratio could be negatively impacted.
e. When assessing the results of these ratios, what advice would you have for this
organization if it was considering securing financing for a major capital expense