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9 Cards in this Set
- Front
- Back
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State how each of the following is computed and explain what might be indicated by the results of the computation:
(a) Operating income ratio (b) Operating expense ratio (c) Return on investment (d) Times interest earned |
(a) Operating income / Operating revenue.
(b) Operating revenue / Operating income;(Both) Indicates relationship between operating expenses and operating revenue. (c) Excess revenue / Expenses (d) Adding excess revenue over expenses and bond interest expense / Bond interest expense; Indicates hospitals ability to pay interest charges on bonds |
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What are common-size financial statements?
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Refers to statements in which relative percentages of financial statement items as well as their dollar amounts are shown.
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Niceplace Hospital's nursing service expenses were 957,400 in 20X2 and 898,300 in 20X1. Prepare a horizontal analysis of the Niceplace Hospital data.
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Nursing Service Expenses
(+/-) 20X2 20X1 Amount Percent 957,400 898,300 59,100 6.6%+ |
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State how each of the following is computed and explain what might be indicated by the results of the computation:
(a) Current ratio (b) Quick ratio (c) Current asset turnover |
(a) Current assets / Current liabilities
(b) Quick assets / Current liabilities; (both) Indicates current debt paying ability (c) Total operating revenues / Current assets; Indicates efficient employment of current resources |
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What is meant by a vertical analysis of the balance sheet? The statement of operations?
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The base figure for asset analysis is total assets, all others assets are expressed as percentages of total assets.
Total operating revenue is the base figure for the copulation of component percentages. |
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"A hospital with a current ratio of 4 to 1 has greater current financial strength than does a hospital with a current ratio of only 2 to 1." Do you agree or disagree?
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Yes; however a "price" may be paid for that current financial strength.
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State how each of the following is computed and explain what might be indicated by the results of the computation:
(a) Accounts receivable turnover (b) Number of days' charges uncollected (c) Ratio of accounts receivable to current assets |
(a) Net patient service revenue / Average receivables; Indicates amount receivables from patients that year
(b) Net receivables / Avg daily charges; Indicates the quality of receivables (c) Net accounts receivable / Current assets; Indicates the composition of current assets |
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State how each of the following is computed and explain what might be indicated by the results of the computation:
(a) Inventory turnover (b) Avg number of days' supply in inventories (c) Ratio of inventory to total current assets |
(a) Dividing total cost of supplies used by average inventories; Indicates quality of inventory management
(b) Dividing inventories by average daily usage; Indicates quality of inventory management (c) Dividing inventory by the total current assets; Indicates composition of current assets to inventory |
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How is debt/net assets ratio computed? Explain what might be indicated by the results of the computation.
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Debt/net ratio is computed by dividing total liabilities by total net assets; Indicates the relative debt of the facility
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