Patton Fuller Ratio

Topics: Balance sheet, Generally Accepted Accounting Principles, Asset Pages: 3 (796 words) Published: February 17, 2013
Patton-Fuller Ratio Computation
Shourn Henderson, Marilyn Lilly, Noralva Rodriguez
February 11, 2013
Dr. Ben Kukoyi

Patton-Fuller Ratio Computation

This paper will address the ratio computations to Patton-Fuller Community Hospital taken from Audited and Unaudited Reports from 2008-2009. From 2008-2009 the existing assets reduced, but showed a growth in the hospital’s responsibilities. The hospital is presently making adequate revenue to cover the debts, which equals to no profit. Revenue needs to rise to avoid the debts of the hospital from increasing. Providing excellence service will in turn increase the quantity of patients seen eventually increasing revenue.
The Current Ratio decrease, due to assests, and an increase in liabilities, which indicates a 2.23% change in the ratio of assets to liabilities. The sharp drop in cash was offset by large rises in Net Accounts Receivable and Inventory, which are ordinarily unfavorable events also. However, if significant supplies were purchased (due to vendor discounts), the increase in Inventory could have been an astute business decision. The uncollected Accounts Receivables are troublesome. 1.The Quick Ratio decrease. The main difference between the Current Ratio and the Quick Ratio is 6.05:1 “inventory” in the Quick Ratio. 1.The Days Cash on Hand decrease, due to cash equivalents. 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 of cash. 1.The Days Receivables increase, effectively removing about $22,121 in cash from the facility and leaving that cash in the hands of the payers. 1.The Debt Service Coverage Ratio is decrease due to the increase in cash and the increase in “Maximum Annual Debt Service”. Because the hospital has decrease expenses 1.The change in the Liabilities to Equity Ratio (ratio of what is “owed” to what...

References: University of Phoenix. (2009,2008). Patton-Fuller Community Hospital [Multimedia]. Retrieved from University of Phoenix, HCS/405 website.
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