HCA 312- Week 4- Assignment 2

User Generated

Ongpng09

Health Medical

ashford university

Description

Week 4 - Assignment 2

Financial and Operating Ratios

[WLOs: 1, 2, 3, 4] [CLOs: 1, 2, 3, 4, 5]

Prior to beginning work on this assignment, review Chapters 13, 14, 15, as well as the 16 Financial Ratios for Analyzing a Company’s Strengths and Weaknesses (Links to an external site.)Links to an external site. article and the Financial Ratios (Links to an external site.)Links to an external site. web page. You will also utilize Appendices 13A, 13B, 13C, and 33A as well as the Balance Sheet and Income Statement from Dr. Smith and Dr. Brown’s Financial Statements.

Unformatted Attachment Preview

Page 1 of 7 HCA 312 - WEEK 4 ASSIGNMENT ENTER YOUR NAME IN THE BOX ABOVE FINANCIAL AND OPERATING RATIOS INSTRUCTIONS: Review Chapters 11, 12, & 13 before completing the template. You will be utilizing Dr. Smith and Dr. Brown’s Physician Practice financial statements for completing the financial ratio calculations. In addition, you will utilize the Ratio Benchmark & Median Table below as well as the textbook appendices 13A, and 13C to complete the operating ratio calculations. Refer to the Week 4 Assignment directions within the course to understand what is expected in each part of the table below. Thorough explanations and definitions for each section are required. If you include enough detail for each section, the template document will be at least seven pages in length. Include APA citations within the Response Column where appropriate. List your references in APA format on the last row of this template. All citations and references must be in APA style according to the Ashford Writing Center guidelines. Once you complete the template, upload the document to the Week 4 Assignment section of the course. Use the Ratio Benchmark and Median Table below in Part 3 for your analysis on Dr. Smith and Dr. Brown’s financial health status. RATIO BENCHMARK AND MEDIAN TABLE Ratio Benchmark - 50th Percentile) for Comparable Median for Comparable Physician Group Practices Physician Group Practices Current Ratio *2.2 2 Quick Ratio *1.74 1 Debt Service Coverage Ratio *1.49 1.1 Operating Margin *4.45 2.6 Return on Total Assets *4.04% 4.05% *Benchmark Data: 50th Percentile Information extrapolated from Appendix 33B Case Study. HCA312 6/12/2018 Page 2 of 7 PART 1: CALCULATION of FINANCIAL RATIOS: Below are five financial ratios. In each of the columns, you will be responsible for showing the calculation for each based off Dr. Smith and Brown’s financial statements (located with the textbook). You will need to identify the type of ratio as well. Choices for the type of ratio are: LIQUIDITY, SOLVENCY, PROFITABILITY or N/A. EXAMPLE for the INVENTORY TURNOVER RATIO: Show Calculation: 180,000/5000 = 36 Identify the type of ratio: n/a CURRENT RATIO QUICK RATIO DEBT SERVICE OPERATING MARGIN RETURN ON TOTAL ASSETS COVERAGE RATIO Show calculation in the box Show calculation in the Show calculation: (For this Show calculation in the box Show calculation in the box provided: box provided: ratio, the denominator you provided: provided: Identify the type of ratio: Identify the type of ratio: will use is 22,200) Identify the type of ratio: Identify the type of ratio: Identify the type of ratio: HCA312 6/12/2018 Page 3 of 7 PART 2: TYPE OF RATIOS In your own words, define the meaning of each ratio: liquidity, solvency, and profitability. Liquidity Solvency Profitability PART 3: OPERATING RATIOS Define the financial ratios listed below. Next, analyze the result for each ratio calculated above and explain what the calculated result tells you about the financial health of Dr. Smith and Dr. Brown’s physician practice DEFINE: Inventory turnover is calculated to determine how quickly the inventory is used based on the services EXAMPLE: rendered. If the inventory turnover is high, this means the hospital does not have enough inventories on hand to accommodate the patient load. ANALYSIS: For this example, the hospital is turning over their inventory 36 times per INVENTORY TURNOVER RATIO year, which is about 3 times a month. The opposite is true if the inventory turnover calculation is lower than the median. FINANCIAL HEALTH: This could mean that there is a build-up of inventory due to lower than expected patient revenues. HCA312 6/12/2018 Page 4 of 7 1) CURRENT RATIO 2) QUICK RATIO 3) DEBT SERVICE COVERAGE RATIO 4) OPERATING MARGIN 5) RETURN ON TOTAL ASSETS PART 4: CAPITAL BUDGET EXPENDITURES - TIME VALUE OF MONEY CALCULATIONS Complete the tables below by computing the following time value of money calculations: Present Value, Internal Rate of Return, and Pay Back Period for the capital expenditures for Dr. Smith and Brown’s physician practice. Enter the result of the calculation into the blank cells. HCA312 6/12/2018 Page 5 of 7 PRESENT VALUE CE/Amount Compounding Period Rate of Interest Laboratory: $70,000 Annual 4% for 15 years EMR Software: $125,000 Annual 6% for 10 years Present Value INTERNAL RATE OF RETURN Initial cost of Investment Periods of Useful life Estimated annual net cash Look-up table value Rate of Interest inflow generated e-prescribing software: 10 $10,190 6 $14,108 $ 75,000 Lab equipment: $ 58,000 PAY BACK PERIOD (assume no taxes are being paid) Equipment Purchase Price EMR System: $350,000 Period of Useful Increased Annual Operating Costs Depreciation Expense Life Revenue Generated Associated with per Year per Year Revenue 10 years $100,000 $32,000 Pay Back Period $45,000 HCA312 6/12/2018 Page 6 of 7 Integrated Billing System: 10 years $95,000 $27,000 $36,000 $300,000 PART 5: EVALUATION OF CAPITAL BUDGET EXPENDITURES As a Health Care Manager, you will be responsible for operational decisions by applying financial management principals. For Part 5, you will apply the concepts of the Time Value of Money to define, analyze, and rationalize your findings from the Financial and Operation ratio results to make informed decisions regarding capital expenditures for Dr. Smith and Brown’s physician practice. Include any government or regulatory mandate information that you considered when making your decision. Complete each of the cells below. Define the time value of money. Provide a real-world example for the time value of money. Why is time such an important factor when considering a capital expenditure? After review of the financial statements and ratios, analyze the feasibility that the Capital Expenditure listed above would benefit HCA312 6/12/2018 Page 7 of 7 Dr. Smith and Dr. Brown’s practice. Explain your rationale on whether you would recommend the purchase of the capital expenditures identified. Include any positive or negative aspects of regulatory or government mandates that were considered in making the decision to purchase the capital expenditures. REFERENCES List the references you used to complete this assignment. You must format the references in APA format as outlined in 6th edition guidelines found at the AU Writing Center. HCA312 6/12/2018 Page 1 of 7 HCA 312 - WEEK 4 ASSIGNMENT ENTER YOUR NAME IN THE BOX ABOVE FINANCIAL AND OPERATING RATIOS INSTRUCTIONS: Review Chapters 11, 12, & 13 before completing the template. You will be utilizing Dr. Smith and Dr. Brown’s Physician Practice financial statements for completing the financial ratio calculations. In addition, you will utilize the Ratio Benchmark & Median Table below as well as the textbook appendices 13A, and 13C to complete the operating ratio calculations. Refer to the Week 4 Assignment directions within the course to understand what is expected in each part of the table below. Thorough explanations and definitions for each section are required. If you include enough detail for each section, the template document will be at least seven pages in length. Include APA citations within the Response Column where appropriate. List your references in APA format on the last row of this template. All citations and references must be in APA style according to the Ashford Writing Center guidelines. Once you complete the template, upload the document to the Week 4 Assignment section of the course. Use the Ratio Benchmark and Median Table below in Part 3 for your analysis on Dr. Smith and Dr. Brown’s financial health status. RATIO BENCHMARK AND MEDIAN TABLE Ratio Benchmark - 50th Percentile) for Comparable Median for Comparable Physician Group Practices Physician Group Practices Current Ratio *2.2 2 Quick Ratio *1.74 1 Debt Service Coverage Ratio *1.49 1.1 Operating Margin *4.45 2.6 Return on Total Assets *4.04% 4.05% *Benchmark Data: 50th Percentile Information extrapolated from Appendix 33B Case Study. HCA312 6/12/2018 Page 2 of 7 PART 1: CALCULATION of FINANCIAL RATIOS: Below are five financial ratios. In each of the columns, you will be responsible for showing the calculation for each based off Dr. Smith and Brown’s financial statements (located with the textbook). You will need to identify the type of ratio as well. Choices for the type of ratio are: LIQUIDITY, SOLVENCY, PROFITABILITY or N/A. EXAMPLE for the INVENTORY TURNOVER RATIO: Show Calculation: 180,000/5000 = 36 Identify the type of ratio: n/a CURRENT RATIO QUICK RATIO DEBT SERVICE OPERATING MARGIN RETURN ON TOTAL ASSETS COVERAGE RATIO Show calculation in the box Show calculation in the Show calculation: (For this Show calculation in the box Show calculation in the box provided: box provided: ratio, the denominator you provided: provided: Identify the type of ratio: Identify the type of ratio: will use is 22,200) Identify the type of ratio: Identify the type of ratio: Identify the type of ratio: HCA312 6/12/2018 Page 3 of 7 PART 2: TYPE OF RATIOS In your own words, define the meaning of each ratio: liquidity, solvency, and profitability. Liquidity Solvency Profitability PART 3: OPERATING RATIOS Define the financial ratios listed below. Next, analyze the result for each ratio calculated above and explain what the calculated result tells you about the financial health of Dr. Smith and Dr. Brown’s physician practice DEFINE: Inventory turnover is calculated to determine how quickly the inventory is used based on the services EXAMPLE: rendered. If the inventory turnover is high, this means the hospital does not have enough inventories on hand to accommodate the patient load. ANALYSIS: For this example, the hospital is turning over their inventory 36 times per INVENTORY TURNOVER RATIO year, which is about 3 times a month. The opposite is true if the inventory turnover calculation is lower than the median. FINANCIAL HEALTH: This could mean that there is a build-up of inventory due to lower than expected patient revenues. HCA312 6/12/2018 Page 4 of 7 1) CURRENT RATIO 2) QUICK RATIO 3) DEBT SERVICE COVERAGE RATIO 4) OPERATING MARGIN 5) RETURN ON TOTAL ASSETS PART 4: CAPITAL BUDGET EXPENDITURES - TIME VALUE OF MONEY CALCULATIONS Complete the tables below by computing the following time value of money calculations: Present Value, Internal Rate of Return, and Pay Back Period for the capital expenditures for Dr. Smith and Brown’s physician practice. Enter the result of the calculation into the blank cells. HCA312 6/12/2018 Page 5 of 7 PRESENT VALUE CE/Amount Compounding Period Rate of Interest Laboratory: $70,000 Annual 4% for 15 years EMR Software: $125,000 Annual 6% for 10 years Present Value INTERNAL RATE OF RETURN Initial cost of Investment Periods of Useful life Estimated annual net cash Look-up table value Rate of Interest inflow generated e-prescribing software: 10 $10,190 6 $14,108 $ 75,000 Lab equipment: $ 58,000 PAY BACK PERIOD (assume no taxes are being paid) Equipment Purchase Price EMR System: $350,000 Period of Useful Increased Annual Operating Costs Depreciation Expense Life Revenue Generated Associated with per Year per Year Revenue 10 years $100,000 $32,000 Pay Back Period $45,000 HCA312 6/12/2018 Page 6 of 7 Integrated Billing System: 10 years $95,000 $27,000 $36,000 $300,000 PART 5: EVALUATION OF CAPITAL BUDGET EXPENDITURES As a Health Care Manager, you will be responsible for operational decisions by applying financial management principals. For Part 5, you will apply the concepts of the Time Value of Money to define, analyze, and rationalize your findings from the Financial and Operation ratio results to make informed decisions regarding capital expenditures for Dr. Smith and Brown’s physician practice. Include any government or regulatory mandate information that you considered when making your decision. Complete each of the cells below. Define the time value of money. Provide a real-world example for the time value of money. Why is time such an important factor when considering a capital expenditure? After review of the financial statements and ratios, analyze the feasibility that the Capital Expenditure listed above would benefit HCA312 6/12/2018 Page 7 of 7 Dr. Smith and Dr. Brown’s practice. Explain your rationale on whether you would recommend the purchase of the capital expenditures identified. Include any positive or negative aspects of regulatory or government mandates that were considered in making the decision to purchase the capital expenditures. REFERENCES List the references you used to complete this assignment. You must format the references in APA format as outlined in 6th edition guidelines found at the AU Writing Center. HCA312 6/12/2018
Purchase answer to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

please find the attached file. i look forward to working with you again. good bye

Page 1 of 8

HCA 312 - WEEK 4 ASSIGNMENT

ENTER YOUR NAME IN THE BOX ABOVE

FINANCIAL AND OPERATING RATIOS
INSTRUCTIONS:Review Chapters 11, 12,&13 before completing the template. You will be utilizing Dr. Smith and Dr. Brown’s Physician
Practice financial statementsfor completing the financial ratio calculations. In addition, you will utilize the Ratio Benchmark & Median
Table below as well as the textbook appendices 13A, and 13C to complete the operating ratio calculations. Refer to the Week 4 Assignment
directions within the course to understand what is expected in each part of the table below. Thorough explanations and definitions for each section
are required. If you include enough detail for each section, the template document will be at least seven pagesin length. Include APA citations within
the Response Column where appropriate. List your references in APA format on the last row of this template. All citations and references must be in
APA style according to the Ashford Writing Center guidelines. Once you complete the template, upload the document to the Week 4 Assignment
section of the course.
Use the Ratio Benchmark and Median Table below in Part 3 for your analysis on Dr.Smith and Dr. Brown’s financial health status.
RATIO BENCHMARK AND MEDIAN TABLE
Ratio

Benchmark - 50th Percentile) for Comparable

Median for Comparable Physician Group Practices

Physician Group Practices
Current Ratio

*2.2

2

Quick Ratio

*1.74

1

Debt Service Coverage Ratio

*1.49

1.1

Operating Margin

*4.45

2.6

Return on Total Assets

*4.04%

4.05%

*Benchmark Data: 50th Percentile Information extrapolated from Appendix 33B Case Study.
HCA312 6/12/2018

Page 2 of 8

PART 1:
CALCULATION of FINANCIAL RATIOS:
Below are five financial ratios. In each of the columns, you will be responsible for showing the calculation for each based off Dr. Smith and Brown’s
financial statements (located with the textbook). You will need to identify the type of ratio as well. Choices for the type of ratio are:
LIQUIDITY, SOLVENCY, PROFITABILITY or N/A.
EXAMPLE for the INVENTORY TURNOVER RATIO:
Show Calculation: 180,000/5000 = 36
Identify the type of ratio: n/a
CURRENT RATIO

DEBT SERVICE

QUICK RATIO

OPERATING MARGIN

RETURN ON TOTAL
ASSETS

COVERAGE RATIO
Show calculation in the box

Show calculation in the

Show calculation: (For this

Show calculation in the box

Show calculation in the box

provided:

box provided:

ratio, thedenominator you

provided:

provided:

will use is 22,200)
=$470,000/$345,000
=1.4

Identify the type of ratio:
Liquidity

(190,000+250,000)/$345,
0...


Anonymous
Super useful! Studypool never disappoints.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Related Tags