Ratio analysis. The statement of operations and balance

Ratio analysis. 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 receiv- able, 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, oper- ating 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 20X1.

Revenues

20×1

20×0

Net patient service revenue

54,000

$53,000

Other revenue

1,000

500

Total operating revenues

55,000

53,500

Expenses

Salaries and benefits

23,000

22,000

Supplies and other expenses

20,000

23,000

Depreciation

10,000

9,000

Total operating expenses

53,000

54,000

Operating income

2,000

(500)

Excess of revenues over expenses

2,000

(500)

Increase (decrease) in net assets

$2,000

($500)

Exhibit 4.19b Balance Sheet for Longwood Community Hospital

Particulars

20×1

20×0

Current Assets

Cash and Cash Equivalents

$6,000

$4,000

Net patient receivables

10,000

8,500

Prepaid expenses

1,400

1,300

Total current assets

17,400

13,800

Noncurrent assets

Plants, property, and Equipment

Gross plant, property &Equip.

27,000

24,000

(Less accumulated depreciation)

(1,500)

(1,300)

Net plant, property, and equip.

25,500

22,700

Construction in progress

1,000

4,000

Total assets

$43,900

$40,500

Current liabilities

Account payable

$500

$750

Salaries payable

7,800

9,000

Total current liabilities

8,300

9,750

Long-term liabilities

Bond payable

9,000

8,000

Total long-term liabilities

9,000

8,000

Net Assets

26,600

22,750

Total liabilities and net assets

$43,900

$40,500

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