Assignment 2.2: Ratio Analysis

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Assignment 2.2: Ratio Analysis

Name| |

Part 1:

Enter the information based on your computations.

| 2011| 2010| Benchmark| Favorable (F), Unfavorable (U), or Approximate (A)? 2011/2010| 1. Current ratio | 3.52| 2.59| 2.00| Favorable|
2. Days cash on hand| 27.64| 18.10| 15.00| Favorable| 3. Days in A/R| 69.32| 76.59| 45.00| Favorable|
4. Operating margin | 2.18%| 3.03%| 4%| Unfavorable| 5. Return on total assets | 5.08%| 7.13%| 4%| Unfavorable| 6. Return on net assets | 14.54%| 17.76%| 10%| Unfavorable| 7. Debt to capitalization| 61.21%| 53.69%| 50%| Unfavorable| 8. Times interest earned | 2.47| 3.36| 4.00| Unfavorable| 9. Debt service coverage | 1.28| 1.30| 2.00| Approximate| 10. Fixed asset turnover | 3.28| 2.88| 3.00| Favorable| 11. Salary and benefit/NPSR| 84.08%| 82.82%| 55%| Unfavorable|

1. Current ratio = Total Current Assets in Balance Sheet / Total Current Liabilities in Balance Sheet

2011| 2010|
$54,306/$15,425| $39,715/$15,315|
3.52| 2.59
|
2. Days Cash on Hand = Cash and Cash Equivalents from Balance Sheet / [(Total Expenses – Depreciation – Provision for Bad Debts in Statement of Operations) / 365]

2011| 2010|
$12,102/[($168,232 - $6,405 - $2,000)/365]| $6,486/[($138,394 - $5,798 - $1,800)/365]| $12,102/[$159,827/365]| $6,486/[$130.796/365]|
$12,102/437.88| $6,486/358.34|
27.64| 18.10|

3. Days in A/R = Net Patient Accounts Receivable in Balance Sheet / (Net Patient Service Revenue in Statement of Operations / 365)

2011| 2010|
$28,509/($150,118/365)| $25,927/$123,565/365)|
$28,509/411.28| $25,927/338.53|
69.32| 76.59|

4. Operating margin = Operating Income from Statement of Operations / Total Revenues in Statement of Operations

2011| 2010|
$3,747/$171,979| $4,330/$142,724|
.0218 x 100| .0303 X 100|
2.18%| 3.03%|

5. Return...
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