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Northern Arizona University *

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Accounting

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Apr 3, 2024

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1. What is Megatropolis Hospital’s operating margin? To calculate the operating margin, you must divide the operating income by sales or earnings/revenues. In this case, the operating income is $150,000 and the total revenue is $1,700,000. ($150,000/$1,700,000)x100 = 8.8%. 2. What is Megatropolis Hospital’s days in accounts receivable? To calculate days in accounts receivables you must divide net patient receivables by the average daily patient service revenue or AR/Revenue x 365. In this case, net patient receivables = $350,000 and revenue = $1,500,000. ($350,000/$1,500,000) x365 = 85.16 Days, which is a little bit over 85 days. 3. What is Megatropolis Hospital’s long-term debt to net assets ratio? To calculate the long-term debt to net assets ratio you must divide long-term debt by net assets or LTD/Net Assets. In this case the long-term debt =$200,000 and the net assets =$375,000 so $200,000/$375,000 = 0.533 4. What is Megatropolis Hospital’s age of plant? To calculate the age of plant you must divide accumulated depreciation by annual depreciation. $475,000 is the accumulated depreciation in this case and depreciation is $100,000. So, $475,000/$100,000 = 4.75 years. 5. What is Megatropolis Hospital’s fixed asset turnover ratio (use the net fixed assets)? To calculate the fixed asset turnover ratio, we must divide net sales by net fixed assets. In this case, net sales =$1,700,000 and net fixed assets = $425,000 so $1,700,000/$425,000= 4. 6. What is Megatropolis Hospital’s days cash on hand? To calculate days cash on hand you must divide cash on hand by (total expenses – depreciation) and multiply that answer by 365. In this case, cash on hand =$50,000 and total expenses =$1,550,000 and depreciation =$100,000. ($50,000/($1,550,000-$100,000))x365 = 12.59 or a little more than 12 and a half days.
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