Description
Resource: Patton-Fuller Community Hospital Virtual Organization
Review the financial statements, located in the Patton Fuller Community Hospital Virtual Organization.
- Click on the Virtual Organization link in the Materials section to the right.
- Click on the Healthcare tab and access the Patton-Fuller Community Hospital.
- Click the Chief Financial Officer link under the Corporate Officers tab to access the financial statements.
Compute the eight ratios—as shown in Chapter 11—for Patton-Fuller Hospital based on its unaudited financial statements and critique its operating results and financial position. Ratio by ratio, do you agree or disagree with the CEO’s report to the Board?
- Read the Annual Report and the audited financial statements, and re-compute those same ratios using the audited financial statements.
- Consider the financial performance before the audit, and after the audit. What has changed and how significant is that change? What plans should the hospital Board make for next year and the next five years?
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Explanation & Answer
am doing it ASAP.... give me 15 min and i will be through.
Patton-Fuller Community Hospital
This week’s courseware introduced the concept of financial and operating ratios as
performance measurement tools. In this comparative analysis, Team C analyzed both the 2008 –
2009 unaudited and audited financial statements for Patton-Fuller Hospital and computed the
eight ratios—as shown in Chapter 11. The eight ratios widely used in health care consist of: four
liquidity types, two solvency types, and two profitability types. Each team member was assigned
two ratios to compute, analyze the result, provide feedback and recommended plans to present to
the hospital Board and the next years and proceeding five years.
Liquidity ratios are the ratios that measure the ability of a healthcare organization or
private practice financial ability to “be liquid”: in order words, have assets that can be liquidated.
The liquidity ratios are a result of dividing cash and other liquid assets by the short term
borrowings and current liabilities. If the value is greater than 1, it means the short term
obligations are fully covered. Generally, the higher the liquidity ratios are, the higher the margin
of safety that the organization possess to meet its current liabilities.
Patton-Fuller Hospital Liquidity Ratios
Unaudited Balance Sheets
Current Assets
2009
2008
$ 128,867.00
$130,026.00
Change
(1,159.00)
Percent Change
-2%
Current Liabilities
$ 23,807.00
$ 8,380.00
Current Ratio
5.41:1
15.52:1
Quick Ratio
3.48
9.49
Audited Balance Sheets
$15,427.00
184% increase
2009
2008
Change
Percent
Current Assets
$ 127,867.00
$ 130,026.00
(2, 159)
-2 % decrease
Current Liabilities
$ 23,807
$ 8,380.00
Current Ratio
5.37:1
15.52:1
Quick Ratio
3.44
184% increase
9.49
Comments:
The net loss of the organization went down in 2009 as compared to 2008 by 98%. It wa...