Calculate and show the debt service coverage ratio for these two hospitals. Which would be more likely to get a loan using debt financing? Why? Which would be more likely to use equity financing? Why? Hospital 1 Hospital 2 Current Liabilities $145,685,000 $224,790,000 Excess of Revenue over Expenses $33,000,000 $3,500,000 Depreciation and Amortization $4,010,101 $7,645,000 Annual Debt Service Payments $6,435,000 $13,000,000 Current Assets $184,500,000 $223,400,000 Interest $2,750,000 $4,125,000 Principal Payments $10,000,000 $15,000,000
Calculate and show the debt service coverage ratio for these two hospitals.
Which would be more likely to get a loan using debt financing? Why?
Which would be more likely to use equity financing? Why?
Hospital 1 Hospital 2
Current Liabilities $145,685,000 $224,790,000
Excess of Revenue over Expenses $33,000,000 $3,500,000
Annual Debt Service Payments $6,435,000 $13,000,000
Current Assets $184,500,000 $223,400,000
Interest $2,750,000 $4,125,000
Principal Payments $10,000,000 $15,000,000
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