MHA 706 Module 3
Ratio Analysis - answer technique used in financial condition analysis
Financial ratio analysis - answer combines values from the financial statements to
create single numbers that facilitate comparisons
Profitability ratio - answer answers the question- is the business generating sufficient
profits
Liquidity ratio - answer can the business meet its cash obligations or debts
Debt management ratio - answer answers whether the business is using the right mix of
debt and equity
Asset Management - answer looks at whether the business has the right amount of
assets for the patient volume that it has.
Total margin - answernet income /total revenue
Operating margin - answeroperating income/operating revenue
ROA - answernet income/ total assets
ROE - answernet income/ total equity
Return on assets - answerfor every dollar that we invested in assets, the hospital
generated about $__ in net profit.
Return on equity - answerfor every dollar invested by the owners or the community in
this case, the hospital is generating about $__ in net profit.
With the debt ratio - answerthe higher the number it's worse. So you want lower values.
While in the times interest earned, higher are better.
FA turnover - answertotal revenue (net operating + nonoperating)/ net fixed assests
TA turnover - answertotal revenue (net operating + nonoperating)/ total assets
Days in patient accounts receivable - answerNet patient accounts receivable/(net
patient service revenue/365)
Ratio Analysis - answer technique used in financial condition analysis
Financial ratio analysis - answer combines values from the financial statements to
create single numbers that facilitate comparisons
Profitability ratio - answer answers the question- is the business generating sufficient
profits
Liquidity ratio - answer can the business meet its cash obligations or debts
Debt management ratio - answer answers whether the business is using the right mix of
debt and equity
Asset Management - answer looks at whether the business has the right amount of
assets for the patient volume that it has.
Total margin - answernet income /total revenue
Operating margin - answeroperating income/operating revenue
ROA - answernet income/ total assets
ROE - answernet income/ total equity
Return on assets - answerfor every dollar that we invested in assets, the hospital
generated about $__ in net profit.
Return on equity - answerfor every dollar invested by the owners or the community in
this case, the hospital is generating about $__ in net profit.
With the debt ratio - answerthe higher the number it's worse. So you want lower values.
While in the times interest earned, higher are better.
FA turnover - answertotal revenue (net operating + nonoperating)/ net fixed assests
TA turnover - answertotal revenue (net operating + nonoperating)/ total assets
Days in patient accounts receivable - answerNet patient accounts receivable/(net
patient service revenue/365)
