Ratio Analysis

Resources: Ch. 11 of Health Care Finance: Basic Tools for Nonfinancial Managers (3rd ed.), Doctors Smith and Brown Statement of Net Income and Balance Sheet

Use the Ratio Analysis Form to complete the following:

• Define each of the following ratios:
  • Current ratio
  • Quick ratio
  • Debt service coverage ratio
  • Operating margin
  • Return on total assets
• Explain the purpose of each ratio.
• Compute the following ratios from the Doctors Smith and Brown financial statements:
  • Current ratio
  • Quick ratio
  • Debt service coverage ratio
  • Operating margin
  • Return on total assets
• Explain what these ratios tell you about the status of the organization. Compare to the median hospitals. See the table in the Ratio Analysis Form.

Cite your references where indicated according to APA guidelines.