Question

Discuss the meaning of ratio analysis in healthcare. Pick only one (1) ratio from EACH major group from the financial statements. (e.g. Current ratio, ROE, Debt to equity, ALOS) Major Groups: Liquidity ratios (Current ratio, Days Cash-on-Hand, Quick Ratio) Profitability ratios (ROE, ROA, Total Margin, Operating Margin) Leverage/Capital Structure Ratios (Debt ratio, Equity ratio, Debt to Equity Ratio) Nonfinancial Ratios (Occupancy rate, payer mix, ALOS, Expense per discharge, FTE per bed, HMO penetration)

Answer 1

firm. I general Ret Debt of debt - Solution Current Ratio: It is the one of the best known measures of financial Strength. It is the most common measure of short team liquidity. Current ratio is satisfactory depends on the nature of the business and the characteristics of its current assets and trabilites. Generally accepted Ratio is aut Current Ratio - Current Assets Current liabilites Return on Equity : (Roe): It is one of the most important indicators of a firm's profitability and potential growth companies that boost a high Roe with little or no debt are able to grow without large capital expenditures, allows the owners to withdraw cash & reinvest in elsewhere. The ratio reveals the profitability of owner's funds have been utilised by the decisi deali It au levert Det ALOS st that a ALE

firm. It generated Return meauree the percentage return. to equity shareholders. on Equity - Net profity Preferences After taxes - Dividend Equity shareholdas fund J 100 Debt Equity Ratio : The ratio indicates the proportion of debt fund in relation to Equity. It has very often referred in capital structure decision as well as in the legislation dealing with the capital structure dealings. It at the indicator of firm's financial levelage. Debt Equity Ratio - Long terms debt Shareholden funds (equity) days ALOS (Average length of Stay) ir It refeu to average number of that a patient stays in a hospital. ALOS = Inpatient days / Admissions.