Recent financial statements for the Heart Hospital are provided in spreadsheet “Heart Hospital” Calculate and interpret the following ratios for the Heart Hospital (hint: in your interpretation consider benchmarking to industry average) Industry Average Return of assets 22.5% Current ratio 2.0 Days of cash on hand 85 days Average collection period 20 days Debt ratio 40% Debt-to-equity ratio 0.67 Times interest earned 5.0 Fixed asset turnover ratio 1.4 The Heart Hospital As of September 30, 2019 (in thousands) 2019 Current Assets Cash $ 14,500 Accounts Receivable, Net $ 5,918 Medical Supplies Inventory $ 1,211 Prepaid Expense and Other Current Assets $ 1,429 Total Current Assets $ 23,058 Property, Plant and Equipment, Net $ 34,200 Other Assets $ 901 Total Assets $ 58,159 Current Liabilities Accounts Payable $ 2,208 Accrued Compensation and Benefits $ 2,543 Other Accrued Liabilities $ 1,843 Current Portion of Long-Term Debt $ 2,064 Total Current Liabilities $ 8,658 Long-Term Debt $ 22,071 Total Liabilities $ 30,729 Owners' Equity $ 27,430 Total Liabilities and Owners' Equity $ 58,159 The Heart Hospital Statement of Operations Year Ended September, 30, 2019 (in thousands) Revenues: Patient Service Revenue net of Discounts and Allowances $ 70,550 Provision for Bad Debt $ (2,300) Net Patient Service Revenue $ 68,250 Operating Expenses: Personnel Expense $ 21,707 Medical Supplies Expense $ 15,047 Other Operating Expense $ 9,721 Depreciation Expense $ 2,625 Interest Expense $ 1,322 Total Operating Expense $ 50,422 Income from Operations $ 17,828 Non-Operating Income $ 650 Net Income $ 18,478

Recent financial statements for the Heart Hospital are provided in spreadsheet “Heart Hospital” Calculate and interpret the following ratios for the Heart Hospital (hint: in your interpretation consider benchmarking to industry average) Industry Average Return of assets 22.5% Current ratio 2.0 Days of cash on hand 85 days Average collection period 20 days Debt ratio 40% Debt-to-equity ratio 0.67 Times interest earned 5.0 Fixed asset turnover ratio 1.4 The Heart Hospital As of September 30, 2019 (in thousands) 2019 Current Assets Cash $ 14,500 Accounts Receivable, Net $ 5,918 Medical Supplies Inventory $ 1,211 Prepaid Expense and Other Current Assets $ 1,429 Total Current Assets $ 23,058 Property, Plant and Equipment, Net $ 34,200 Other Assets $ 901 Total Assets $ 58,159 Current Liabilities Accounts Payable $ 2,208 Accrued Compensation and Benefits $ 2,543 Other Accrued Liabilities $ 1,843 Current Portion of Long-Term Debt $ 2,064 Total Current Liabilities $ 8,658 Long-Term Debt $ 22,071 Total Liabilities $ 30,729 Owners' Equity $ 27,430 Total Liabilities and Owners' Equity $ 58,159 The Heart Hospital Statement of Operations Year Ended September, 30, 2019 (in thousands) Revenues: Patient Service Revenue net of Discounts and Allowances $ 70,550 Provision for Bad Debt $ (2,300) Net Patient Service Revenue $ 68,250 Operating Expenses: Personnel Expense $ 21,707 Medical Supplies Expense $ 15,047 Other Operating Expense $ 9,721 Depreciation Expense $ 2,625 Interest Expense $ 1,322 Total Operating Expense $ 50,422 Income from Operations $ 17,828 Non-Operating Income $ 650 Net Income $ 18,478

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

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Chapter 17 Problem

17.7 Recent financial statements for the Heart Hospital are provided in spreadsheet “Heart Hospital”

Calculate and interpret the following ratios for the Heart Hospital (hint: in your interpretation consider benchmarking to industry average)

Industry Average

Return of assets 22.5%

Current ratio 2.0

Days of cash on hand 85 days

Average collection period 20 days

Debt ratio 40%

Debt-to-equity ratio 0.67

Times interest earned 5.0

Fixed asset turnover ratio 1.4

	The Heart Hospital
	As of September 30, 2019 (in thousands)

		2019
Current Assets
	Cash	$ 14,500
	Accounts Receivable, Net	$ 5,918
	Medical Supplies Inventory	$ 1,211
	Prepaid Expense and Other Current Assets	$ 1,429
Total Current Assets	$ 23,058
	Property, Plant and Equipment, Net	$ 34,200
	Other Assets	$ 901
Total Assets	$ 58,159

Current Liabilities
	Accounts Payable	$ 2,208
	Accrued Compensation and Benefits	$ 2,543
	Other Accrued Liabilities	$ 1,843
	Current Portion of Long-Term Debt	$ 2,064
Total Current Liabilities	$ 8,658
	Long-Term Debt	$ 22,071
Total Liabilities	$ 30,729
	Owners' Equity	$ 27,430
Total Liabilities and Owners' Equity	$ 58,159

The Heart Hospital
Statement of Operations
Year Ended September, 30, 2019 (in thousands)

Revenues:
	Patient Service Revenue net of Discounts and Allowances	$ 70,550
	Provision for Bad Debt	$ (2,300)
	Net Patient Service Revenue	$ 68,250

Operating Expenses:
	Personnel Expense	$ 21,707
	Medical Supplies Expense	$ 15,047
	Other Operating Expense	$ 9,721
	Depreciation Expense	$ 2,625
	Interest Expense	$ 1,322
	Total Operating Expense	$ 50,422
Income from Operations	$ 17,828
Non-Operating Income	$ 650

Net Income	$ 18,478

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