Patton-Fuller Ratio Computation
Annette Fleming, Beverly Bradley, Yolanda Booker
February 11, 2013
Dr. Ben Kukoyi
1. The Current Ratio, 5.41 to 1 (2009) and 15.5 to 1 (2008), are due to a decrease in current assets of $1,159, and an increase in current liabilities of $15,427, which indicates a 10.1 to 1 change from 2008 to 2009 in the ratio of assets to liabilities. This performance measurement shows that the hospital assets dropped while the liabilities increased. The increase of $22,121 in Accounts Receivables is contributing to the decreasing ability of the hospital to pay its short term debts. In regard to the CEO statement that every financial ratio has improved, we disagree with that statement because the report shows clearly that the Current Ratio dropped from 2008 to 2009. 2. The Quick Ratio are 3.47 to 1 (2009) and 9.49 to 1 (2008). The main difference between the Current Ratio and the Quick Ratio is that Quick Ratio used cash, cash equivalents, and accounts receivable/current liabilities in opposed to the total current assets/current liabilities. We stand in strong disagreement with the CEO statement that all areas of financial ratio have improved; because under careful observation and calculations they have they have not. 3. The Days Cash on Hand are 19.7 days (2009) and 36.3 days (2008) due to significant increase in total liabilities amid the years of comparison and not enough increases in assets to offset the difference. Again, the CEO explained the use of cash to buy equipment and inventory. However, the CEO did not explain how the unfavorable increase in Accounts Receivable also absorbed millions in cash. 4. The Days Receivables are 47.15(2009) and 32.63(2008), effectively removing about $22,121 in cash from the facility and leaving that cash in the hands of the payers. An increase in the days receivable means that more revenue will become more difficult to collect. This computation shows that billing and...
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