evaluate the financial state of Wakeland Community.

Current Show more Exhibit 4.16a Key Financial Ratios Liquidity ratios Formulas Current ratio Current Assets / Current Liabilities Quick ratio (Cash + Marketable Securities + Net Receivables) / Current Liabilities Acid test ratio (Cash + Marketable Securities) / Current Liabilities Days in accounts receivable Net Patient Accounts Receivables / (Net Patient Revenues / 365) Days cash on hand [(Cash + Marketable Securities + Long-Term Investments/Operating Expenses Depreciation and Amortization Expenses) / 365] Average payment period days Current Liabilities / [(Operating Expenses Depreciation and Amortization Expenses) / 365] Revenues expenses and profitability Formulas Operating revenues per adjusted discharge Total Operating Revenues / Adjusted Discharges Operating expense per adjusted discharge Total Operating Expenses / Adjusted Discharges Salary and benefit expense as percentage of operating expense Total Salary and Benefit Expense / Total Operating Expenses Operating margin Operating Income / Total Operating Revenues Nonoperating revenue ratio Nonoperating Revenues and Other Income / Total Operating Revenues Return on total assets Excess of Revenues over Expenses / Total Assets Return on net assets Excess of Revenues over Expenses / Net Assets Activity Ratios Formulas Total asset turnover ratio Total Operating Revenues / Total Assets Net fixed assets turnover ratio Total Operating Revenues / Net Plant and Equipment Age of plant ratio Accumulated Depreciation / Depreciation Expense Capital Structure ratios Formulas Long-term debt to net assets ratio Long-Term Debt / Net Assets Net assets to total assets ratio Net Assets / Total Assets Times interest earned ratio (Excess of Revenues over Expenses + Interest Expense) / Interest Expense Debt service coverage ratio (Excess of Revenues over Expenses + Interest Expense + Depreciation and Amortization Expenses) / (Interest Expense + Principal Payments) a Adjusted Discharges = (Total Gross Patient Revenue / Total Gross Inpatient Revenues) Total Discharges. b In for-profit health care organizations calculated as Net Income / Total Assets. c Called return on equity in for-profit health care organizations and calculated as Net Income / Owners Equity. d Called long-term debt to equity in for-profit health care organizations and calculated as Long-Term Debt / Owners Equity. e Called equity to total assets in for-profit health care organizations and calculated as Owners Equity / Total Assets. f In for-profit health care organizations calculated as (Net Income + Interest Expense) / Interest Expense. g In for-profit health care organizations calculated as (Net Income + Interest Expense + Depreciation and Amortization Expenses) / (Interest Expense + Principal Payments Horizontal vertical and ratio analyses. Exhibits 4.27a and 4.27b show the statement of operations and balance sheet for the 310-bed Wakeland Community Hospital for 20X0 and 20X1. Adjusted discharges for 20X0 and 20X1 are 25000 and 26000 respectively. a. Perform a horizontal analysis on both statements. b. Perform a vertical analysis on both statements relative to 20X0 c. Compute all the selected ratios listed in Exhibit 4.16a and compare them with the industry benchmarks. Using these financial performance measures evaluate the financial state of Wakeland Community. The debt principal payments each year are $5.5 million whereas adjusted discharges as mentioned are 25000 in 20X0 and 26000 in 20X1. EXHIBIT 4.27a STATEMENT OF OPERATIONS FOR WAKELAND COMMUNITY HOSPITAL Wakeland Community Hospital Statement of Operations for the Years Ended December 31 20X1 and 20X0 (in thousands) Particulars 201 200 Revenues Net patient service revenue $225000 $210000 Other operating revenue 6400 5700 Total operating revenues 231400 215700 Operating expenses Salaries and benefits 124173 110167 Supplies and other expenses 85000 61000 Depreciation 12000 11300 Interest 4500 2500 Total operating expenses 225673 184967 Income from operations 5757 30733 Nonoperating income Investment income/contributions 7500 8500 Excess of revenue over expenses 13227 39233 Net Income 13227 39233 Exhibit 4.27b Balance Sheet for Wakeland Community Hospital Particulars 201 200 Current assets Cash and cash equivalents $40500 $35500 Net patient A/R 39500 36400 Inventories 3800 4000 Other current assets 6500 5200 Total current assets 90300 81100 Plant property and equipment Gross plant property and equipment 215000 175500 Less Accumulated depreciation) (65000) (107000) Net property plant and equipment 12000 11300 Interest 4500 2500 Total operating expenses 225673 184967 Income from operations 5757 30733 Funded depreciation/board-designated funds Cash and short-term investments 185000 110000 Total assets $425300 $259600 Current liabilities Account Payable $14500 $8500 Salaries payable 4500 3500 Notes payable 4300 4500 Total current liabilities 23300 16500 Long-term liabilities Bonds payable 60000 27500 Total long-term liabilities 60000 27500 Net assets 342000 215600 Total liabilities and assets $425300 $259600 Show less

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