During the immediate past Discussion Board Assessment, you responded to the questions posed by your CFO regarding the essential items of the Financial Statement, including reasons for audit failures. During this Module, he told you that one could refer to ratio analysis as the surgical accounting tool to dissect the company’s financial statement, thus having a lens into the company’s financial health. You nodded in agreement. He quickly asked you to provide him with some of the analyses.

Similar to the Tables/Exhibits in Chapter 14 of the book, let’s assume that you conducted ratio analyses (and presented same to him) on the company’s financial statement, and you arrived at the following numbers: Current Ratio of 2.0; Days Cash on Hand (78.1); Days in Account Receivable (72.0 days); Total Asset Turnover (0.37); Interest Coverage (7.0); Long-term Debt to Net Assets ($2.71); Total Margin (10%); and Return on Assets of (2%).

However, when you presented the above numbers to your CFO, he wanted you to answer the following and discuss the same with your team members:

1. Evaluate why we use ratios to analyze the financial statements of organizations.
2. Discuss the interpretation and implication of those numbers.
3. Facing the reality that patients can bring lawsuits against the Healthcare Organization, he (your CFO) wants to know what, if anything, must be disclosed in the notes to the company’s Financial Statements.

The CFO will reward you graciously with 100 points towards your promotion, and that those points will be allocated to each of the three areas of expectations above as follows:

1. 40 points
2. 40 points
3. 20 points.

To appropriately guide you so that you can take full advantage of the point incentives/reward system, the CFO advised you to follow the company’s document titled “Discussion Board Postings Rubric,” as the HR Director would use that document to score your responses to the above questions. In addition to that Rubric, you are aware that the Organization always encourages you to feel free to contact other relevant materials that you may deem fit. You must cite and provide references for all materials used as appropriate.

Answer rating: 100% (QA)

2current ratio is 2 Explanation current ratio is the ratio of current to the current liabilities In general current ratio is anything over1 with 15 to 2 being ideal if this case the company has more t... View the full answer