Question

For each ratio, provide a brief ratio analysis, trend analysis and comparative analysis. Ratio Analysis: Trend Analysis Comparative Analysis Briefly explain what the ratio means Compare 2017 numbers with 2016 numbers and explain if the numbers improved or declined and briefly why this could have occurred Compare WTRH 2017 with industry averages and explain how WTRH did compared to other comparable hospitals. Ratio Analysis Trend Analysis Comparative Analysis Ratio Analysis Trend Analysis Comparative Analysis Ratio Analysis Trend Analysis I Comparative Analysis Ratio Analysis Trend Analysis Comparative Analysis Ratio Analysis Trend Analysis Comparative Analysis Ratio Analysis Trend Analysis

Please help with "Days in Patient AR" and providing a "brief ratio analysis, trend analysis, and comparative analysis " for each Ratios

Answer 1

Answer:-

Total Margin = Net income / sales
The total margin decreased in 2017 to 4.47% compared to 5.2% in 2016. This may be due to lower net income
The total margin was lower in 2017 with respect to the industry average which is 5.3%

Operating margin = EBIT / sales
The operating margin in 2017 stood at 1.57% as compared to 3.5% in 2016. This might be due to lower operating income.
The operating margin in 2017 was much lower than the industry average of 3.6%.

ROA = Net income / Assets
The ROA in 2017 was 4.26% compared to 4.9% in 2016. This may be probably due to lower net income or higher assets.
The ROA in 2017 was lower at 4,26 % compared to the industry average of 4.9% which shows that other hospitals has better ROA than West Texas Regional Hospital (WTRH).

ROE = Net income / Equity
The ROE in 2017 was lower at 6.31% compared to the 2016 value of 7.4% which may be due to lower net income or higher equity in 2017.
The ROE in 2017 was lower at 6.31% compared to industry average of 8.3% and the lower value shows that other hospitals have performed better than WTRH.

Current Ratio = Current assets / Current liabilities
The Current ratio is higher at 2.28 in year 2017 compared to 2.0 in 2016. This shows that WTRH is in better position to meet its short term obligations in 2017 compared to year 2016.
The Current ratio in 2017 is 2.28 compared to lower industry average value of 2.0 in 2016 which shows that WTRH is having good liquidity position than other hospitals.

Days cash on hand is calculated by dividing cash and cash equivalents by the system's average daily cost of operations, excluding depreciation.
The Days cash on hand is at 13.82 in 2017 compared to 22.6 in 2016 which shows that WTRH is having lower cash and cash equivalents in 2017 compared to 2016
The Days cash on hand is 13.82 in 2017 compared to industry average of 31.5 which shows that the other hospitals are having better cash and cash equivalents that WTRH.

Debt ratio = Total debt / Total Assets
The debt ratio is 32.44 in 2017 compared to 34.2 in 2016 shows that WTRH is having lower debt compared to assets in 2017 than in 2016
The debt ratio is 32.44 in 2017 compared to industry average of 41.8 which shows that WTRH is less levered than other hospitals.

Times Interest earned = EBIT / Interest expense
The ratio is lower at 3.38 in 2017 as compared to 4.6 in 2016. This shows that WTRH was in better position to service debt in 2016 than in 2017.
The Times interest earned in 2017 is 3.38 compared to industry average of 4.0 which shows that the other hospitals are in better position to service debt.

Fixed asset turnover = Net sales / Average fixed assets
The Fixed asset turnover ratio is higher in 1.32 in 2017 compared to 1.2 in 2016  which may be due to higher sales or lower average fixed assets in 2017 compared to 2016.
The ratio is 1.32 in 2017 is less that 2.1 of industry average which may be due to higher sales of other hospitals or lower average fixed assets of other hospitals compared to WTRH.

Total Asset turnover = Net sales / Average Total assets
The total assets turnover ratio is higher at 0.95 in 2017 compared to 0.90 in 2016 which shows that WTRH may had higher sales in 2017 or lower average total assets in 2017 compared to year 2016.
The ratio is higher at 0.95 in 2017 compared to industry average of 0.8 in 2016 which shows that WTRH may had higher sales or lower average total assets compared to other hospitals.

Days in Patient AR = 365 / Receivables turnover ratio (2017)

Receivables turnover = Net annual sales / Average receivables
= $ 164500 / $ 29650
Receivables turnover = 5.548
Days in Patient AR = 365 / 5.548 = 65.79

The Days in Patient AR is 65.79 in 2017 compared to 62.0 in 2016 which shows that WTRH is taking more time to receive cash in 2017 than in 2016.
The Days in Patient AR is 65.79 for WTRH in 2017 compared to industry average of 68.0 which shows that WTRH is receiving cash in less days compared to other hospitals.