Save Time On Research and Writing
Hire a Pro to Write You a 100% Plagiarism-Free Paper.
Get My Paper
Case Study Analysis Discussion—SMH Liquidity, Debt, and Operating Ratios
In this assignment, you will calculate ratios and analyze the data collected in M1: Assignment 2. You will compare ratios from the SMH data to ratios calculated from the comparative facilities.
Measure the liquidity, debt, and operating ratios of the FP and NFP organizations, particularly the following:
- LiquidityCurrent ratioAcid test ratio
- Operating performanceReturn on assetsOperating profit total and percentageInvestment yieldReturn on equity
- Management efficiencyDays in accounts receivable (AR)Days inventory on handDays cash on hand
Use an Excel spreadsheet that you downloaded in M1: Assignment 2, to create tables to compare the data from SMH to the data from the other facilities. You will use two years of data for comparison. Present data for each of the above categories on one sheet. Ensure that all formulas are included in the calculations. The facilitator will review both the accuracy of the data and the efficient use of Excel.
Save Time On Research and Writing
Hire a Pro to Write You a 100% Plagiarism-Free Paper.
Get My Paper
For more help with calculations, you can use the following Web site:
- Investopedia. (2009). Financial terms. Retrieved March 10, 2009, from http://www.investopedia.com/terms/g/?viewed=1
|
|
| 2 |
>SMH Introduction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Sakasegawa Memorial Hospital (SMH) is a
|
|
| 6 |
|
| 5 |
0-bed metropolitan not-for-profit (NFP) hospital in a major city. The hospital competes with other hospitals for its patient base. Managed care is a significant part of its revenue stream and the hospital is not receiving competitive rates. This puts the hospital at a competitive disadvantage.
The hospital has been in existence for over
| 7 |
5 years and there is only a small mortgage on the building. This is an advantage for the hospital.
The hospital sold property and used the funds to build the infrastructure of the organization. While the hospital needs additional funding for major projects, it has no more property available for sale.
In addition, while the hospital has enjoyed the benefits of several significant contributors, these contributors are getting “contributor fatigue.” They are less interested in contributing because the hospital has not turned the corner on operation revenue and expenses. The hospital faces significant issues with the current economic crisis. The issues include a drop in
Medicaid |
payments and a number of people in the community losing their insurance coverage.
2007 revenue expense data
|
| Revenue |
|
| Source |
Amount |
| Net Patient revenue non-
| Medicare |
$260,
|
|
|
| 1 |
8
|
|
| 3 |
,000.00
] |
|
| Capitation Rev |
enue
$36,829,320.00 |
| Patient Revenue – Medicare Medicaid |
$188,
|
|
| 4 |
08,800.00
three items match line 1 Part 1 |
| Unrelated business revenue |
Capitation Rev
|
|
| Other |
rev – sale of asset
$5,492,700.00 |
| Rent revenue |
$450,000.00 |
| dividends |
$3,800,000.00 |
| Investment Income |
$1,892,925.00 |
| Other rev – other |
$5,290,000.00 |
Note – see detail |
| Contributions |
$7,722,580.00 |
| Net assets released from restrictions |
| Ttl
| Unrestricted |
Rev
$510,069,325.00 |
|
|
| Expenses |
Source
|
|
| Total |
Clinical Services |
management & General |
Fundraising |
| Salaries |
| Salaries Officers |
25a Part II |
$5,008,242.00 |
$540,392.00 |
$4,135,300.00 |
$332,550.00 |
| Other Salaries |
26 Part II |
$176,481,232.00 |
$158,833,127.00 |
$16,765,700.00 |
$882,405.00 |
| Pension |
27 Part II |
$17,942,172.00 |
$16,147,964.00 |
$1,704,508.00 |
$89,700.00 |
| Fringe Benefits |
28 Part II |
$23,783,424.00 |
$21,406,424.00 |
$2,259,000.00 |
$118,000.00 |
| Payroll Taxes |
29 Part II |
$13,336,000.00 |
$12,002,000.00 |
$1,266,000.00 |
$68,000.00 |
| Total Salaries & Benefits |
|
|
| total |
$236,551,070.00 |
$208,929,907.00 |
$26,130,508.00 |
$1,490,655.00 |
| Fundraising fees |
30 Part II |
| $0.00 |
| Accounting Fees |
31 Part II |
| $340,900.00 |
$340,900.00
| Legal fees |
32 Part II |
$1,345,300.00 |
$1,211,300.00 |
$134,000.00 |
| Supplies & Other |
33 Part II |
$226,106,126.00 |
$225,600,500.00
rwmayer: rwmayer:
See detail – Hospital costs |
$500,210.00 |
$5,416.00 |
| Telephone |
34 Part II |
$1,049,247.00 |
$944,400.00 |
$99,600.00 |
$5,247.00 |
| Postage and shipping |
35 part II |
$339,584.00 |
$305,626.00 |
$32,260.00 |
$1,698.00 |
| Occupancy |
36 Part II |
$0.00
| Equipment rental and maintenance |
37 Part II |
$8,967,852.00 |
$8,071,152.00 |
$896,700.00 |
| Printing and publications |
38 Part II |
$177,000.00 |
$159,200.00 |
$16,800.00 |
$1,000.00 |
| Conference conventions and meetings |
40 Part II |
$78,500.00 |
$70,000.00 |
$8,000.00 |
$500.00 |
| Interest exp (net) |
41 Part II |
$9,601,800.00 |
$8,551,800.00 |
$1,000,000.00 |
$50,000.00 |
|
|
|
| Depreciation |
42 Part II |
$31,083,552.00 |
| $27,975,052 |
.00
$3,108,500.00 |
| Provision for Bad debt |
43a * |
| $1,005,000.00 |
$1,005,000.00
| Other expenses |
43b-* |
| Ttl exp |
$516,645,931.00 |
$482,823,937.00 |
$32,267,478.00 |
$1,554,516.00 |
| Excess of rev over exp |
($6,576,606.00) |
2007 asset liab data
| Beginning of year |
End of Year |
| ASSETS |
Source
2005 |
2006 |
| Cash |
line 45 Part IV |
$6,787,000.00 |
$2,210,000.00 |
| Cash investments |
line 46 Part IV |
$19,850,000.00 |
$32,808,000.00 |
| Accounts Receivable |
Line 47a Part IV |
$117,500,000.00 |
|
| Less Allowance |
Line 47b Part IV |
$47,948,000.00 |
| Net Accounts Receivable |
Line 47 Part IV |
$63,330,
| 160 |
.00
$69,552,000.00 |
| Pledges Receivable |
Line 48a Part IV |
$4,700,900.00 |
Less Allowance
| Line 48b Part IV |
$576,000.00 |
| Net Pledges Receivable |
Line 48 Part IV |
$6,123,000.00 |
$4,124,900.00 |
| Other Note receivables |
Line 451cPart IV |
$13,378,061.00 |
$22,606,100.00 |
| Inventory |
Line 52 Part IV |
$8,443,379.00 |
$10,362,000.00 |
| Prepaid expenses |
line 53 Part IV |
$9,917,000.00 |
$7,705,000.00 |
| Investments (FMV) |
line 54a Part IV |
$74,180,000.00 |
$78,800,000.00 |
| Land |
line 57a Part IV |
$617,314,000.00 |
| Accoumulated Depreciation |
line 57b Part IV |
$328,568,000.00 |
| Net Land |
line 57c Part IV |
$290,824,900.00 |
$288,746,000.00 |
| Other Assets |
line 58 Part IV |
$81,000,000.00 |
$74,500,000.00 |
| Total Assets |
| $573,833,500.00 |
| $591,414,000.00 |
| Liabilities |
| Accounts Payable |
line 60 Part IV |
$83,829,885.00 |
$87,118,742.00 |
| Tax exempt bond |
line64a part IV |
$139,233,400.00 |
$136,451,800.00 |
| Mortgage and Note Payable |
line 64b Part IV |
$17,210,000.00 |
$17,900,000.00 |
| Other Liabilities |
line 65 Part IV |
$122,683,500.00 |
$133,556,958.00 |
| Total Liabilbites |
$362,956,785.00 |
$375,027,500.00 |
| Fund Balances |
Unrestricted
| line 67 Part IV |
$155,132,000.00 |
$158,866,000.00 |
| Temporarily restricted |
line 68 Part IV |
$38,523,000.00 |
$40,208,000.00 |
| Permanently restricted |
line 69 Part IV |
$17,221,715.00 |
$17,312,500.00 |
| Fund balance |
$210,876,715.00 |
$216,386,500.00 |
| Liabilities and Net Assets |
$573,833,500.00 $591,414,000.00
Detailed revenue
| Part III Form 990 |
|
|
|
|
|
|
| Patient days |
Inpatient |
164,972 |
| Ambulatory service visits |
outpatient |
148,617 |
| Patient days distribution |
% distribution |
total days |
|
|
|
|
|
|
| Cardiology |
| 6% |
9,145 |
|
|
|
|
|
|
| Orthopedic |
10% |
15,959 |
|
|
|
|
|
|
| Medicine |
7
| 2% |
119,246 |
|
|
|
|
| Other services |
13% |
20,622 |
| distribution of
|
|
|
| patient days |
Medicare Medicaid
Managed care/Insurance |
Private pay |
Column1 |
total
Cardiology
| 3658 |
457 |
4481 |
549 |
9145 |
Orthopedic
| 5905 |
160
9097 |
798 |
15959 |
Medicine
| 41736 |
9540 |
66778 |
1192 |
119246 |
Other services
| 9223 |
496 |
10401 |
502 |
20622 |
| 60522 |
10653 |
90756 |
3041 |
164972 |
% distribution
Roger Mayer: Roger Mayer:
use this allocation basis to allocate expenses between payers in Module 3 assignment 2.
|
37% |
6%
55% |
2%
|
| 100% |
| Revenue Distribution |
| Payer |
Column2 |
| Total Revenue |
|
|
| Inpatient Revenue |
| Outpatient Revenue |
|
| Medicare Revenue |
$179,567,920.00 |
| $154,045,694.40 |
$25,522,225.60 |
|
| Medicaid Revenue |
$16,840,880.00 |
| $14,956,792.00 |
$1,884,088.00 |
|
| Managed Care |
$274,162,320.00 |
| $226,729,856.00 |
$47,432,464.00 |
|
| Private Pay |
$14,850,000.00 |
| $12,177,000.00 |
$2,673,000.00 |
| $485,421,120.00 |
|
| $407,909,342.40 |
$77,511,777.60 |
| Inpatient Revenue Distribution |
Cardiology Orthopedic Medicine Other
|
|
|
|
| Totals |
Inpatient Revenue
| $39,612,365.72 |
$41,460,795.08 |
$284,847,513.80 |
$41,988,667.80 |
$407,909,342.40
Detailed costs
| Table I |
|
| Personnel and other |
| totals |
| Inpatient allocated expenses |
|
|
| Allocation basis |
|
|
| Officers Salaries& Fringe |
$708,424.15 |
$566,739.32 |
patient days
|
|
| Clinical Salaries & Fringes |
$208,221,482.85 |
$197,810,408.70 |
hours of service |
41.6779152919 |
|
|
| Other clinical expenses |
$20,318,478 |
$16,254,782 |
patient days
Depreciation $27,975,052
| $22,380,042 |
| square feet |
|
|
| Physician Fees |
$14,850,673.89 |
$11,880,539.11 |
patient days
|
|
| Other supplies |
$9,433,511.95 |
$7,546,809.56 |
patient days
|
|
| Utilities |
$17,289,172.12 |
$13,831,337.69 |
square feet
| Total Personnel and other |
$298,796,794.96 |
| $270,270,658.39 |
| Table II |
|
|
|
| Direct Patient Care Expenses |
totals Inpatient allocated expenses Allocation basis
| Cardiology |
$12,506,205.80 |
$10,004,964.64 |
|
| 100% to cardiology |
| Orthopedic |
$12,339,125.41 |
$9,871,300.33 |
|
| 100% to Orthopedic |
|
| pharmaceuticals |
$23,391,254.11 |
$18,713,003.29 |
Patient days
$69,545,157.89 |
| Ancillary (lab x-ray) |
$63,540,193.25 |
$50,832,154.60 |
Patient days
Total
| $111,776,778.57 |
| $89,421,422.85 |
| Table III |
|
|
|
| Indirect Patient Care expenses |
Totals
Inpatient Allocated expenses |
Allocation basis
| Cardiology medical supplies |
$2,659,459.72 |
$2,127,567.78 |
100% to cardiology
| Orthopedic medical supplies |
$2,393,513.75 |
$1,914,811.00 |
100% to Orthopedic
pharmaceuticals
| $5,318,919.44 |
$4,255,135.55 |
Patient days
$31,913,516.65 |
| general medical supplies |
$21,275,677.77 |
$17,020,542.21 |
Patient days
| ancillary expenses |
$13,297,298.60 |
$10,637,838.88 |
Patient days
Total
| $44,944,869.28 |
| $35,955,895.43 |
| Table IV |
|
|
|
| Malpractice |
Totals
Inpatient Allocated Expenses |
Allocation basis
Cardiology
| $5,263,709.72 |
$4,210,967.78 |
100% to cardiology
Orthopedic
| $6,908,619.01 |
$5,526,895.21 |
100% to Orthopedic
Medicine
| $14,804,183.60 |
$11,843,346.88 |
100% medicine |
Other services
| $328,981.86 |
$263,185.49 |
Patient days
Total
| $27,305,494.19 |
| $21,844,395.35 |
| Table V |
| Clinical Salaries & Fringes – Inpatient Allocation |
total
Cardiology
| 324,648 |
Orthopedic
| 478,770 |
Medicine
| 3,458,134 |
Other services
| 484,617 |
| 4,746,169 |
| average rate per hour – $41.68 |
| Table VI |
| Square feet allocation – Inpatient services |
Cardiology
| 21% |
Orthopedic
| 26% |
Medicine
| 49% |
Other services
| 4% |
total 100%
Module 3 Asgn 1 Instructions
| The SMH financial statement contains additional data that will allow you to conduct an analysis of revenue efficiency factors. |
| In this assignment, you will calculate direct expenses including labor, supply, and drug costs. |
|
|
|
| Assignment detail |
|
|
|
| Tabs to reference: |
|
|
|
| “Detailed Revenue” allocates revenue by inpatient and outpatient |
|
|
|
| “Detailed Expenses” allocated direct expenses by inpatient and outpatient |
| “2007 Revenue Expense Data” provides data on other income sources and indirect expenses. |
1
| Create a table that shows gross profit (patient revenue – direct expenses) for inpatient and outpatient services. |
| See example: |
Inpatient Revenue Outpatient Revenue Total Revenue
| Inpatient direct expenses |
Outpatient direct expenses |
Total Expenses |
| IP Gross Profit |
OP Gross Profit |
|
| Total Gross Profit |
2
| Calculate Gross Profit (GP) margin for both services. |
3
| Calculate GP per patient day and per operating theater (OT) procedure. |
4
| Compare your expenses to your benchmark data. (Because some of the comparative data does |
| not have sufficient detail this may be a high-level review.) |
5
| Comment on the services from the perspective of expense and revenue distribution and explain why |
| there are differences between gross profit margins |
6
| Complete a table that includes other expenses and other revenue. The table should clearly |
| distinguish between direct and indirect expenses |
7
| Comment on why other income and contributions are critical to the survival of the organization. |
| Does the reliance on investment income mean that the organization will take a higher risk in order |
| to increase income? |
Module 3 Assgn 2 Instructions
| You will use the information from M3: Assignment 1, develop a gross profit analysis for managed care payers |
| to develop a strategic plan for a managed care contract negotiation. |
Assignment detail
Tabs to reference:
“Detailed Revenue” allocates revenue by inpatient and outpatient
“Detailed Expenses” allocated direct expenses by inpatient and outpatient
1
| Calculate inpatient gross profit for the major payers at the hospital. |
gross profit (patient revenue-direct expenses) |
| Inpatient analysis |
Medicare Revenue Medicaid Revenue Managed Care Private Pay Totals
Patient Revenue
Roger Mayer: Roger Mayer:
use revenue distribution table
|
$154,045,694.40 $14,956,792.00 $226,729,856.00 $12,177,000.00 $407,909,342.40
Expenses
Roger Mayer: Roger Mayer:
Allocate expenses based upon patient day distribution %.
Personnel and other $270,270,658.39
Direct Patient Care Expenses $89,421,422.85
Indirect Patient Care expenses $35,955,895.43
Malpractice $21,844,395.35
|
|
| Total Direct Expenses |
$417,492,372.03 |
Total Gross Profit
| Gross profit percentage by Payer |
100%
2
| Calculate gross profit and gross profit percentage by payer. |
3
| Comment on the results of your GP calculations. |
4
| In this example we assumed that patients from each payer incurred costs at the same rate. |
| Is this assumption correct? What level of detail of cost identification should the Hospital attempt to obtain? |
5
| Based on your understanding of your costs, you will develop a plan for contract negotiations with a managed care provider. In your plan, |
| outline a strategy for contract negotiation. |
6
| Based upon your analysis of the other organizations are you in a better or worse position when it comes for contract negotiations? |
7
| Payers always want to move procedures from the Inpatient setting to an Outpatient setting. |
| How does this affect the hospital strategy? |
Module 4 Assgn 1 Instructions
| You will analyze the SMH Data Set to identify costs associated with specific clinical product lines and measure gross profit. |
| You will compare results your analysis and become familiar with activity based costing and managed care contracting in this study. |
| The “Detailed Cost” tab provides inpatient costs and the allocation basis for each cost. You will put this information into a model |
| and a model that analyzes costs by product line. In this case we have for product lines including Cardiology, Orthopedic Medicine, and Other. |
Assignment detail
Tabs to reference:
“Detailed Revenue” allocates revenue by inpatient and outpatient
“Detailed Expenses” allocated direct expenses by inpatient and outpatient
1
| Calculate inpatient gross profit for each product line. The template that students can use is as follows: |
| Note: Allocate revenue based upon patient day distribution between product lines |
Cardiology Orthopedic Medicine Other Totals
Inpatient Revenue
Expenses
Officers Salaries& Fringe
Clinical Salaries & Fringes
Other clinical expenses
Depreciation
Physician Fees
Other supplies
Utilities
Direct Patient Care Expenses
Indirect Patient Care expenses
Malpractice
Total Direct Expenses
| Gross profit by Product Line |
2
| Comment on the results of your inpatient GP calculations. What product line is most profitable by dollar amounts and gross profit percentage? |
3
| Is there value in separating product lines into more detail? What detail would you recommend? |
| For example, what is the value in separating revenue and expenses by physician? Surgery type? And others? |
Module 4 Assgn 2 Instructions
| In this assignment, students will carry out a profit analysis for a specific product line. |
| We are using the example of Cardiology. However, students can use another product line |
| Students will develop a Cost-Volume-Profit template to help measure costs and changes to variable and indirect costs using SMH data. |
Assignment detail
Tabs to reference:
“Detailed Revenue” allocates revenue by inpatient and outpatient
“Detailed Expenses” allocated direct expenses by inpatient and outpatient
| “Module 4 Assgn 1 Instructions” for baseline cost information |
1
| Develop a template of costs. |
| You should separate expenses between variable and fixed expenses. |
| To assist, the template provides some guidance: |
| Inpatient Cardiology |
Cardiology total |
Patient days |
Per patient day |
Revenue
Expenses
| Variable |
Clinical Salaries & Fringes
Other clinical expenses
Physician Fees
Other supplies
Direct Patient Care Expenses
Indirect Patient Care expenses
| Total Variable Expenses |
| Fixed |
Officers Salaries& Fringe
Roger Mayer: Roger Mayer:
do not calculate fixed costs on a per patient day basis.
|
Depreciation
Utilities
Malpractice
| Total Fixed Expenses |
Total Direct Expenses
| Gross profit for Inpatient Cardiology |
2
| Calculate the break even point in patient days |
| Note: Break even point |
| Total Fixed cost / (per patient day revenue – per patient day variable expenses) |
3
| Calculate the break even point assuming a 5 percent increase in clinical salaries and a 4 percent increase in officer salaries. |
4
| A physician wants to add a new procedure that will increase direct patient care expense by $200 per day. |
| What is the impact on gross profit and the breakeven point? |
5
| The hospital is considering hiring a physician. This will increase annual costs by $250,000. However, with the addition of this |
| physician it is anticipated that patient days will increase by 6 percent. Is this a good move for the Hospital? |
6
| Many times it is difficult to determine if a cost is variable or fixed. In addition, costs may be variable, but only in a relevant range. |
| Do you agree with the categorization of costs as they are presented on this template? Would you recommend changes? What additional |
| information would help you analyze the data? |
SMH
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Beginning of year |
Beginning of year
| Beginning of year |
| End of year |
|
| 2
|
|
|
|
|
|
|
| 0 |
05
|
| 2006 |
2005 |
2006
|
|
| Current asset |
$202,008,600.00 |
$228,
|
|
|
| 1 |
68,000.00
|
|
|
|
|
|
| Liquidity |
|
|
| Current Liability |
$22
|
| 3 |
,063,285.00
$223,570,542.00 |
|
|
|
|
|
|
| Current Ratio |
| 0.906 |
1.0
|
| 21 |
|
|
|
| net patient revenue |
| $448,591,800.00 |
| $485,421,120.00 |
|
|
|
|
|
|
| Acid Test Ratio |
| 0.868 |
0.9
|
| 74 |
|
|
|
| net patient revenue per day |
$1,229,018.63 |
$1,329,920.88 |
|
|
| Total Revenue |
| $510,069,325.00 |
$510,069,325.00
|
|
|
|
|
|
| Operating Performance |
|
|
| Total expense |
|
|
| $516,645,93
|
|
|
| 1.00 |
$516,645,931.00
|
|
|
|
|
|
| Return on assets |
| –
|
|
| 0.01 |
1
| –
| 0.011 |
|
|
| excess of revenue over expenses |
| -$6,576,606.00 |
-$6,576,606.00
|
|
|
|
|
|
| Operating Profit total and Percentage |
| 0.496 |
| 0.534 |
|
|
| Patient care revenue |
$448,591,800.00 $485,421,120.00
|
|
|
|
|
|
| Investment yield |
|
|
| 0.012 |
0.012
|
|
| Patient care expense |
|
|
| $226,106,126.00 |
$226,106,126.00
|
|
|
|
|
|
| Return on equity |
| -0.0312 |
-0.0
|
| 30 |
4
|
|
| Investment Income |
| $1,892,925.00 |
$1,892,925.00
|
|
| Unrealized gains or losses |
| $0.00 |
$0.00
|
|
|
|
|
|
| Management efficiency |
|
|
| Unrestricted cash and investment |
$
|
| 15 |
5,132,000.00
$158,866,000.00 |
|
|
|
|
|
|
| Days in accounts receivable |
|
|
| 52 |
52
|
|
| net assets |
$210,876,715.00 |
$216,386,500.00 |
|
|
|
|
|
|
| Days inventory on hand |
| 14 |
| 17 |
|
|
| Net accounts receivable |
$63,330,160.00 |
$69,552,000.00 |
|
|
|
|
|
|
| Days cash on hand |
| 117 |
| 119 |
|
|
| net inventory |
$8,443,3
|
| 79 |
.00
$10,362,000.00 |
|
|
| supply expense |
$226,106,126.00 $226,106,126.00
|
|
| supply expense per day |
| $619,468.84 |
$619,468.84
|
|
| Total operating expense |
$516,645,931.00 $516,645,931.00
|
|
| depreciation |
| $31,083,552.00 |
$31,083,552.00
| $16.73 |
| $0.33 |
NSMC
Beginning of year
|
|
|
|
|
| End of Year |
Beginning of year End of Year
|
|
|
|
|
|
|
|
|
| 2009 |
2009 2009 2009
Current asset
| $2,232,068.00 |
$2,779,467.00 |
Liquidity Liquidity
Current Liability
| $343,835.00 |
$379,428.00 |
Current Ratio
|
|
| 6.49 |
Current Ratio
|
|
| 7.33 |
net patient revenue
|
|
|
|
| $87,179,871.00 |
$87,860,173.00 |
Acid Test Ratio 6.49 Acid Test Ratio 7.33
net patient revenue per day
|
|
| $238,848.96 |
$240,712.80 |
Total Revenue
|
| $88,626,940.00 |
$88,626,940.00 Operating Performance Operating Performance
Total expense
|
|
|
| $49,114,939.00 |
$49,114,939.00 Return on assets
| 15.16 |
Return on assets
|
|
| 13.40 |
excess of revenue over expenses
|
| $39,512,001.00 |
$39,512,001.00 Operating Profit total and Percentage 1.00 Operating Profit total and Percentage 1.00
Patient care revenue $87,179,871.00 $87,179,871.00 Investment yield
|
| -0.25 |
Investment yield
| -0.18 |
Patient care expense
|
|
|
| $186,021.00 |
$186,021.00 Return on equity
| 18.67 |
Return on equity 13.40
Investment Income
|
| $538,695.00 |
$538,695.00
Unrealized gains or losses
|
| -1037432 |
-1037432 Management efficiency Management efficiency
Unrestricted cash and investment
| $1,982,575.00 |
$2,753,846.00 |
Days in accounts receivable 1 Days in accounts receivable 1
net assets
| $2,115,806.00 |
$2,949,409.00 |
Days inventory on hand 0 Days inventory on hand 0
Net accounts receivable
| $149,868.00 |
$178,087.00 |
Days cash on hand 15 Days cash on hand 21
net patient revenue $87,179,871.00 $87,179,871.00
net patient revenue per day $238,848.96 $238,848.96
net inventory 0 0
supply expense $186,021.00 $186,021.00
supply expense per day
|
| $509.65 |
$509.65
Total operating expense $49,114,939.00 $49,114,939.00
depreciation
|
| $150,760.00 |
$150,760.00
Mayo
Beginning of year End of Year Beginning of year End of Year
2009 2009 2009 2009
Current asset
| $255,750,843.00 |
$262,139,460.00 |
Current Liability
| 39544292 |
$32,861,671.00 |
Liquidity Liquidity
net patient revenue
|
|
|
| $757,704,326.00 |
$757,704,326.00 Current Ratio
| 6.47 |
Current Ratio
| 7.98 |
net patient revenue per day
|
| $2,075,902.26 |
$2,075,902.26 Acid Test Ratio
| 6.16 |
Acid Test Ratio
| 7.64 |
Total Revenue
|
| $811,369,827.00 |
$811,369,827.00
Total expense
|
|
| $754,621,284.00 |
$754,621,284.00 Operating Performance Operating Performance
excess of revenue over expenses
|
| $56,748,543.00 |
$56,748,543.00 Return on assets
| 0.08 |
Return on assets
| 0.07 |
Patient care revenue $757,704,326.00 $757,704,326.00 Operating Profit total and Percentage
|
|
| 0.99 |
33291
Operating Profit total and Percentage
0.99332911292 |
Patient care expense
|
| $5,054,560.00 |
$5,054,560.00 Investment yield 0.011 Investment yield 0.01
Investment Income
|
| $3,725,144.00 |
$3,725,144.00 Return on equity
| 0.14 |
Return on equity
| 0.12 |
Unrealized gains or losses 0 0
Unrestricted cash and investment
| 343138720 |
$390,271,717.00 |
Management efficiency Management efficiency
net assets
| 410147839 |
$473,792,139.00 |
Days in accounts receivable 79 Days in accounts receivable 74
Net accounts receivable
| $164,257,519.00 |
$154,379,758.00 |
Days inventory on hand 3 Days inventory on hand 30
net inventory
| $12,125,387.00 |
$11,043,164.00 |
Days cash on hand
| 175 |
Days cash on hand
| 198 |
supply expense
| $136,136,185.00 |
$135,442,441.00 |
supply expense per day
| $3,889,605.29 |
$371,075.18 |
Total operating expense $754,621,284.00
| $663,430,105.00 |
depreciation
| $38,212,818.00 |
$34,874,574.00 |
financial statement analysis
| Mayo hospital |
SMH hospital |
NSMC hospital |
Beginning of year End of Year Beginning of year End of year Beginning of year End of Year
2009
|
| 2010 |
2005 2006 2009 2010
Liquidity Liquidity
Liquidity Current Ratio 0.906
| 1.021 |
Current Ratio 6.49 7.33
Current Ratio 6.47 7.98 Acid Test Ratio 0.868
| 0.974 |
Acid Test Ratio 6.49 7.33
Acid Test Ratio 6.16 7.64
Operating Performance Operating Performance
Operating Performance Return on assets -0.011 -0.011 Return on assets 15.16 13.40
Return on assets 0.08 0.07 Operating Profit total and Percentage 0.496 0.534 Operating Profit total and Percentage 1.00 1.00
Operating Profit total and Percentage 0.99 0.99 Investment yield 0.012 0.012 Investment yield -0.25 -0.18
Investment yield 0.011 0.01 Return on equity -0.0312
| -0.0304 |
Return on equity 18.67 13.40
Return on equity 0.14 0.12
Management efficiency Management efficiency
Management efficiency Days in accounts receivable 52 52 Days in accounts receivable 1 1
Days in accounts receivable 79 74 Days inventory on hand 14 17 Days inventory on hand 0 0
Days inventory on hand 3 30 Days cash on hand 117 119 Days cash on hand 15 21
Days cash on hand 175 198
Liquidity ratio summary
This analysis evaluates the performance of a fictitious not-for profit organization , SMH ;a not for profit organization called Mayo hospital and a for profit organization called North Shore Medical Center (NSMC). The liquidity ratio of NSMC and Mayo as indicated by the current ratio from both years show their improvement to meet current obligations with current assets. Similarily the acid-test ratio also indicates an increase in the availability of cash to pay off all of its debts. Specially, the fact that the acid-test ratio has a value more than one is an indication that the firm is able to pay its obligations without having to sell inventory. SMH on the other hand has an acid test ratio less than one which means that it s forced to sell inventory to maintain liquidity. Since inventory is the least liquid of all current assets, the acid-test ratio gives a better picture of a firm’s ability to meet its current obligations than current ratio (Peavler, n.d). Operating performance summary
The negative value for the return on assets for SMH hospital shows that it is not in favorable condition because it indicates that there is a loss for every dollar spent on an asset. The fact that there is no improvement from the year 2005 till 2006 is also another indication of inefficient use of the organization’s assets to generate revenue. The operating profit on the other hand shows a little improvement than the previous year which means that SMH is either working on its cost control or sales is increasing faster than costs relative to the previous year (Peavler, n.d).
The operating profit total for both Mayo and NSMC hospital tell the amount of cash that is thrown off after most of the expenses are met (Peavler, n.d). A higher value of operating profit than a benchmark value indicates more generation of profit. On the other hand there is a decline in the return on assets (ROA) of both NSMC and Mayo hospital which is not a good sign as ROA speaks of how much a company is making a use out of its assets to generate profit. So a decline in ROA indicates that there is decrease in sales or poor cost control (CCDConsultants, n.d).
The return on equity for SMH and Mayo hospitals is nearly zero whereas that of NSMC is higher. However this cannot signify that NSMC is better than SMH and Mayo because the amount of capital the company requires matters to the value of return on equity. As more amount of capital is needed the number of share holders increase resulting in low return on equity. In addition the fact that the later two are not for profit hospitals might make the return on equity ratio inapplicable as there are no shareholders present (CCDConsultants, n.d).
Management efficiency summary
According to the data in days in accounts receivables Mayo hospital shows a decrease in the days which shows that it has started converting its receivables in to cash more quickly than the previous year whereas SMH shows same number of days in both years. This is an indication that there has been no change in credit policy. NSMC on the other hand shows one day in accounts receivables which mean that the company does not give credit services. To determine the status of the average collection period, a company may compare it with its credit policy and measure its performance (Peavler, n.d).
On the other hand, all of them show an increase in days cash on hand than their previous years. This is generally a good trend because the more the number of days the more a company is capable of paying its obligations.
The number of days inventory indicate how much the company is well stocked to meet demands. Mayo hospital shows a great deal of difference between days inventory in the year 2009 and 2010. There is higher number of days inventory in the later year which may be an indication of a decrease in the demand for the product. On the contrary, NSMC shows a zero days inventory which means that the company is not keeping enough stocks to meet demand (BIZWIS, n.d).
References
BIZWIS. (n.d). Bizwis Consulting . Retrieved from Wizards of business analysis: http://www.bizwiz.ca/number_of_days_inventory.html
CCDConsultants. (n.d). CCD Consultants. Retrieved from Return on Assets interpretation: http://www.ccdconsultants.com/documentation/financial-ratios/return-on-assets-interpretation.html
Peavler, R. (n.d). What is operating profit margin ratio. Retrieved from About.com Business finance: http://bizfinance.about.com/od/financialratios/f/Operating_Profit_Margin.htm
|
Turn in your highest-quality paper
Get a qualified writer to help you with
“ question for courseworkhero.co.uk ”
Get high-quality paper
NEW! AI matching with writer
USA: +1(669)289-8683 
Sign in
