Ratio Analysis University of Phoenix HCS/571 Finance Resource Management Sept 24, 2013Rosetta Stringfellow, MBA, BSRatio Analysis Ratio analysis is a widely used managerial tool that compares one number with another to gain insights that would not arise from looking at either of the numbers separately. Ratio analysis is used to examine and interpret the relationship between two numbers on a financial statement. This is done so that the managers of a facility can determine whether or not the organization needs to change any of their financial variables in order to remain competitive in their market. The ratio analysis converts numbers into meaningful comparisons which managers can use to compare their facilities with others within the same market. The management team can also use the ratio analysis to see how the facility is performing from year to year. In sum, ratio analysis shows the strengths and weaknesses of a health care facility (Finkler, Kovner, & Jones, 2007). The financial data for this paper are from the financial statements of Norwalk Hospital located in Fairfield County, Connecticut. Common size ratios allow comparisons between comparable health care organizations. It is important to see how the facility compares to others in the region of the market place (Finkler et al., 2007). Cash/Total assets x 100 = Cash to total assets ratio (Finkler et al., 2007) (77,594,791 ÷ 431,464,740) x 100 = 17.984% for year 2011 (85,492,679 ÷ 483,427,995) x 100 = 17.684% for year 2012 The ratio results provide a quick assessment of the company’s ability to meet the financial obligation by paying their bills. The ratio decreased the last year which means that the hospital invested more money back in the company and this ratio above 17.5% is great for the hospital...
References: Finkler, S., Kovner, C., & Jones, C. (2007). Financial managment for nurse managers and executives (3rd ed.). St. Louis, MO: Saunders.
Norwalk Hospital. (n.d.). Financial Statements. Retrieved from http://www.norwalkhospital.org/about-us/financial-statements
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