Based on the material in the financial reports below for the HMO, fill in the yellow boxes
Question:
Based on the material in the financial reports below for the HMO, fill in the yellow boxes (2 points each, 14 points total) and answer the questions below:
- What is the value of profitability for ABC as compared to the Industry Averages? (15 points)
- What can you tell in regard to the ROE in terms of industry averages? (15 points)
- What assumptions can you make in regard to the liquidity ratios? (15 points)
- What assumptions can you make in regard to the utilization of assets? (15 points)
- Overall, how ABC doing as compared to the industry average?
(16 points)
Balance Sheet for ABC HMO:
Current Assets | |
Cash and Short-Term Investments | $17,879 |
Net accounts receivable | $7,894 |
Inventory | $ 0 |
Other Current Assets | $13,980 |
Total Current Assets | a) |
Net Fixed Assets | $ 13,589 |
Long-Term Investments | $19,245 |
Goodwill and Other Intangibles | $ 4,300 |
Other Assets | $ 4,325 |
Total Assets | b) |
Liabilities and Equity | |
Total current liabilities | $33,875 |
Long-Term debt | $31,982 |
Other Liabilities | $ 8,451 |
Equity | c) |
Total Equity and Liabilities | d) |
Income Statement Data | |
$179,875 | |
Expenses | |
Depreciation & amortization | $ 2,140 |
Other operating expense | $163,889 |
Total operating expense | e) |
Interest expense | $ 567 |
Net income before taxes | f) |
Income tax | $ 5.432 |
Net Income After Tax | g) |
ABC’s HMO’s Financial Ratio Analysis
Financial Ratio | ABC | Industry Average |
Liquidity | ||
Days in receivable | 23 | 35 |
Days cash on hand | 93 | 123 |
Capital Structure | ||
Debt financing %% | 74.5% | 34.5% |
Long-term debt to capital % | 48.3% | 43.5% |
Cash flow to debt % | 9.1% | 14.3% |
Activity | ||
Fixed Asset Turnover | 39.5 | 64.3 |
Total Asset Turnover | 1.6 | 1.5 |
Profitability | ||
ROE% | 18.1% | 16.2% |
Total Margin | 4.0% | 4.2% |
Understanding and managing organizational behavior
ISBN: 978-0136124436
6th Edition
Authors: Jennifer M. George, Gareth R. Jones