$3.$a$\mathrm{.}1.$ Profitability ratios

Bayside Memorial Hospital's financial statements follow:

INCOME STATMENT $20182017$

Revenues:

Patient service revenue $$106,502$ $$95,398$

Less: provision for bad debts $4,3283,469$

Net patient service $$102,174$ $$91,929$

Premium revenue $5,2324,622$

Other revenue $3,6446,014$

Total operating revenues $$111,050$ $$102,565$

Expenses:

Nursing services $$58,285$ $$56,752$

Dietary services $5,4244,718$

General services $13,19811,655$

Administrative services $11,42711,585$

Employee health and welfare $10,25010,705$

Malpractice insurance $1,3201,204$

Depreciation $4,1304,025$

Interest expense $1,5421,521$

Total expenses $$105,576$ $$102,165$

Operating income $$5,474$ $$400$

Nonoperating income $2,0981,995$

Net income $$7,572$ $$2,395$

BALANCE SHEET $20182017$

Cash and equivalents $$3,263$ $$3,095$

Short$-$term investments $4,0002,000$

Net patient accounts recevable $23,84022,738$

Inventories $3,1772,982$

Total current assets $$34,280$ $$30,815$

Gross property and equipment $$145,158$ $$140,865$

Accumulated depreciation $25,16021,030$

Net property and equipment $$119,998$ $$119,835$

Total Assets $$154,278$ $$150,650$

Accounts payable $$4,707$ $$5,145$

Accrued expenses $5,6505,421$

Notes payable $2,9756,237$

Total current liabilities $$13,332$ $$16,803$

Long$-$term debt $$28,75030,900$

Finance lease obligations $1,8322,155$

Total long$-$term liabilities $$30,582$ $$33,055$

Net assets $($equity$)$ $$110,364$ $$100,792$

Total liabilities and net assets $$154,278$ $$150,650$

Calculate Bayside's $2018$ Total margin.

Write your answer as a percentage. Round to one decimal place.

$2017$ Industry average

Bayside's total margin $2\mathrm{.}3\%5\mathrm{.}0\%$

Note how Bayside's total margin has increased from $2017,$ and is now well

above the industry average. Its profitability has improved.

$3.$a$\mathrm{.}2$ Profitability ratios

Continuing from the previous question, calculate Bayside's $2018$ return on assets $($ROA$).$

Write your answer as a percentage. Round to one decimal place.

$2017$ Industry average

Bayside's ROA $1\mathrm{.}6\%4\mathrm{.}8\%$

Note how Bayside's ROA has increased from $2017,$ and is now slightly above the industry average. Its profitability, as measured by ROA, has increased.

$3.$a$\mathrm{.}3.$ Profitability ratios

Continuing from the previous questions, calculate Bayside's $2018$ return on equity $($ROE$).$

Write your answer as a percentage. Round to one decimal place.

$2017$ Industry average

Bayside's ROE $2\mathrm{.}4\%8\mathrm{.}4\%$

Note how Bayside's ROE has increased from $2017.$ It is still below the industry average, however.

Something to think about: how can Bayside's ROE be below the industry average when its ROA is above the industry average?

$3.$b$\mathrm{.}1.$ Liquidity ratios

Continuing from the previous questions, calculate Bayside's $2018$ current ratio.

Round to one decimal place.

$2017$ Industry average

Bayside's current ratio $1\mathrm{.}82$

Note how Bayside's current ratio has increased from $2017,$ and is now above the industry average.

Bayside's liquidity, measured by its current ratio, has improved.

$3.$b$\mathrm{.}2.$ Liquidity ratios

Continuing from the previous questions, calculate Bayside's $2018$ days cash on hand.

Round to one decimal place.

$2017$ Industry average

Bayside's days cash on hand $18\mathrm{.}930\mathrm{.}6$

Note how Bayside's days cash on hand has increased from $2017,$ but it still lags the industry average.

This is probably a better measurement of Bayside's liquidity, which is worse than the average hospital.

$3.$c$\mathrm{.}1.$ Debt management ratios

Continuing from the previous questions, calculate Bayside's $2018$ debt ratio.

Write your answer as a percentage. Round to one decimal place.

$2017$ Industry average

Bayside's debt ratio $33\mathrm{.}1\%42\mathrm{.}3\%$

Note how Bayside's debt utilization has decreased from $2017,$ falling further below the industry average.

$3.$c$\mathrm{.}2.$ Debt management ratios

Continuing from the previous questions, calculate Bayside's $2018$ debt to equity ratio.

Write your answer as a percentage. Round to one decimal place.

$2017$ Industry average

Bayside's debt to equity ratio $49\mathrm{.}5\%73\mathrm{.}3\%$

Note how Bayside's debt utilization has decreased from $2017,$ falling even further below the industry average.

$3.$c$\mathrm{.}3.$ Debt management ratios

Continuing from the previous questions, calculate Bayside's $2018$ TIE ratio.

Round to one decimal place.

$2017$ Industry average

Bayside's TIE ratio $2\mathrm{.}64\mathrm{.}0$

Note how Bayside's ability to pay its interest has improved since $2017,$ even rising above the industry average.

$3.$c$\mathrm{.}4.$ Debt management ratios

Continuing from the previous questions, calculate Bayside's $2018$ CFC ratio. Bayside's debt principle repayment in $2018$ was $$2,000,$ and its lease payment due was $$1,368.$

Round to one decimal place.

$2017$ Industry average

Bayside's CFC ratio $2\mathrm{.}32\mathrm{.}3$

Note how the amount of cash flow Bayside has to cover its fixed financial requirements has improved since $2017,$ also rising above the industry average.