1. What does each ratio in the table mean?

2. What can you tell me about the financial position of the hospital based on these ratios?

3. How can this financial information help you with making managerial decisions? Are there any other financial indicators you need for more effective decision-making? 

Transcribed Image Text:

Table 1. Select Financial Ratios of the Community Hospital, 2015-2019 2015 2016 2017 2018 2019 ROE % 7.5 7.6 9.9 5.9 5.7 Total margin % 6.5 6.6 8.6 5.2 4.9 Financial strength index 2.2 1.9 3.1 2.2 2.3 Days cash on hand 86 77 108 119 135 Days in accounts receivable 69 63 53 55 46 Revenues to net fixed assets 1.9 1.7 1.7 1.7 1.8 Average age of plant 7.9 8.5 8.8 9.6 11.1 Debt financing % 20.8 23.1 19.6 17.5 19.3 Cash flow to debt % 49.9 43.4 61.9 52.2 44.8 Table 1. Select Financial Ratios of the Community Hospital, 2015-2019 2015 2016 2017 2018 2019 ROE % 7.5 7.6 9.9 5.9 5.7 Total margin % 6.5 6.6 8.6 5.2 4.9 Financial strength index 2.2 1.9 3.1 2.2 2.3 Days cash on hand 86 77 108 119 135 Days in accounts receivable 69 63 53 55 46 Revenues to net fixed assets 1.9 1.7 1.7 1.7 1.8 Average age of plant 7.9 8.5 8.8 9.6 11.1 Debt financing % 20.8 23.1 19.6 17.5 19.3 Cash flow to debt % 49.9 43.4 61.9 52.2 44.8

Answer rating: 100% (QA)

Understanding the Financial Ratios of the Community Hospital 1 Ratio Definitions ROE Return on Equity Measures profitability relative to shareholder equity A higher ROE indicates better use of shareho... View the full answer