Use the table on the next page to complete the Week Eight assignment. In this assignment, you will review the textbook to find the definitions for each ratio. Use the financial statements for Drs. Smith and Brown, located on the student website, to perform the calculations and complete the form.

Review the following example on how to perform the inventory turnover calculation, which shows you how to complete the table.

* Two different methods can determine the inventory turnover ratio.

* Cost of goods sold—operating revenue of a hospital—divided by ending inventory * Total revenues plus net nonoperating gains divided by ending inventory

This example uses the first method to perform the calculation.

Because a hospital provides a service, we would find the number that reflects services provided. Total operating revenue reflects money that is earned for providing services. Locate the Statement of Net Income on the student website. Find the total operating revenue. This is $180,000. Then, locate the ending inventory number. To find the ending Inventory, use the Balance Sheet on the student website. The ending inventory number is 5000.

Cost of goods sold—operating revenue: 180,000 divided by ending inventory of 5000; 180,000/5000 = 36

* Place this information in the table. You will do the same with the rest of the ratios. Take the result of your calculations and place in the grid, as in the example. * In addition, you are responsible for stating whether the ratios are solvency, leverage, or profitability ratios. Enter your answers in the appropriate column. Then, explain what these ratios tell us about the physician group practice.

Note. You will use the financial statements of Drs. Smith & Brown to perform the calculations on the next page. To calculate the debt service coverage ratio, you need the maximum annual debt service, which is $22,200.

...RatioAnalysisRatioanalysis is used to evaluate relationships among financial statement items. The ratios are used to identify trends over time for one company or to compare two or more companies at one point in time. Financial statement ratioanalysis focuses on three key aspects of a business: liquidity, profitability, and solvency.
Liquidity Ratios
Liquidity...

...Financial ratioanalysis
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OUTLINE
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Introduction
Liquidity ratios
Profitability ratios and activity ratios
Financial leverage ratios
Shareholder ratios
Introduction
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Liquidity shows the degree to which an asset or security can be bought or sold in the market without affecting the asset's price. Liquidity is characterized by a high level of trading activity. Also it the ability to convert an asset to cash quickly, known as "marketability.”...

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RATIOANALYSIS
Financial ratios are useful indicators of a firm's performance and financial situation. Most ratios can be calculated from information provided by the financial statements. Financial ratios can be used to analyze trends and to compare the firm's financials to those of other firms. In some cases, ratioanalysis can predict future bankruptcy.
Financial ratios can be...

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Ratioanalysis – Shinepukur Ceramics Versus RAK Ceramics
Current ratio
Shinepukur: From 2009 to 2010, current ratio of Shinepukur has increased by 0.24 because of increase in total current assets and decrease in total current liabilities. The increase in total current has occurred for increase in accounts-and-other-receivables, advances-deposits-and-prepayments and cash. Among these elements, the increase in...

...RatioAnalysisRatioanalysis is one of the techniques of financial analysis where ratios are used as a yardstick for evaluating the financial condition and performance of a firm. Analysis and interpretation of various accounting ratios gives skilled and experienced analyst a better understanding of the financial condition and performance of the firm than what he could have...

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