Week Practical Exercise Instructions Compatibility Modej - Word WEEK THREE PRACTICAL EXERCISE INSTRUCTIONS AND HELP PART...

 
 

 

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Week Practical Exercise Instructions Compatibility Modej - Word WEEK THREE PRACTICAL EXERCISE INSTRUCTIONS AND HELP PART 1 OF YOUR EXERCISE HORIZONTAL ANALYSIS - Is a method of analyzing financial statements that looks at the percentage change in a line item from one year to the next. It is calculated by the formula: {(Subsequent Year - Previous Year) / Previous Year} x 100. • Make these calculations and enter into the YELLOW column in both exhibit 4-27a and b. NOTE: the Subsequent year is 20X1, and the Previous Year is 20X0 PART 2 OF YOUR EXERCISE VERTICAL ANALYSIS - Is a method to analyze financial statements that answers the general question: What percentage of one line item is an- other line item? The formula is: (Line Item of Interest/Base Line Item) x 100. • On the Statement of Operations, you are to calculate each line item (the Item of Interest) as a percentage of TOTAL OP- ERATING REVENUES (the Base Line Item). On the Balance Sheet, you are to calculate each line (the Item of Interest) as a percentage of TOTAL ASSETS (Base Line Item). • You are responsible for calculating the vertical analysis for 20X1 only. PART 3 OF YOUR EXERCISE This portion of your exercise is related to calculating RATIOS: • You will only be required to calculate the CURRENT RATIO, QUICK RATIO, and ACID-TEST RATIO for the YEAR 20X1. • You will find the data you need to calculate the ratios in EX- HIBIT 4-27b Balance Sheet for Wakeland Community Hospital, and the formulas and hints are listed below. • Find the benchmark and the desired position in the table on page 185 of your textbook. Be sure to use the correct bench- mark for the size of Lake Community Hospital (310 beds). CURRENT RATIO - In calculating this ratio, be sure to use TOTAL CUR- RENT ASSETS and TOTAL CURRENT LIABILITIES to make your calcula- tion. CURRENT ASSETS CURRENT LIABILITIES QUICK RATIO - In calculating this ratio, consider CASH AND CASH EQUIVALENTS to be the same as CASH+MARKETABLE SECURITIES, and NET RECEIVABLES to be the same as NET PATIENT ACCOUNTS RECEIV- ALBES. Be sure to use TOTAL CURRENT LIABILITIES. CASH + MARKETABLE SECURITIES + NET RECEIVALBES CURRENT LIABILITIES ACID-TEST RATIO - In calculating this ratio, consider CASH AND CASH EQUIVALENTS to be the same as CASH+MARKETABLE SECURITIES, and be sure to use TOTAL CURRENT LIABILITIES. CASH + MARKETABLE SECURITIES CURRENT LIABILITES End of document 185 EXHIBIT 4.16a FINANCIAL RATIOS FOR ALL U.S. HOSPITALS BY BED SIZE Optum & CMS Median Ratio* Hospital Industry Ratio Liquidity ratios Current ratio Quick ratio Acid test ratio Days in accounts receivable Days cash on hand Average payment period, days Revenue, expense, and profitability ratios Operating revenue per adjusted discharge Operating expense por adjusted discharge Salary and benefit expense as a percentage of operating expense Operating margin Nonoperating revenue Return on total assets Return on net assets Activity ratios Total asset turnover ratio Net fixed assets turnover ratio Age of plant ratio Capital structure ratios Long-term debt to net assets ratio Net assets to total assets ratio Times interest earned ratio Debt service coverage ratio 2.11 1.52 0.30 49 86 50 $7 448 $7,197 40% 0.03 0.04 0.04 0.08 1.07 2.12 10.31 0.21 0.54 3.78 3.18 1-99 Beds 100-199 Beds 2.18 1.65 0.35 47 85 45 $7,086 $6,494 40% 0.02 0.05 0.04 0,08 1.19 2.17 10.41 0.18 0.58 3.47 3.51 2.04 1.39 0.18 45 81 51 $6,407 $6,112 38% 0.03 0.03 0.04 0.08 1.03 2.03 10.12 0.31 0.51 3.43 3.63 200-299 Beds 1.88 127 0.20 44 102 56 $6,766 $6,250 3.8% 0.04 0.05 0.04 0.09 0.99 2.11 11.97 0.42 0.47 3.64 3.50 300-399 Beds 1.71 1.42 0.20 48 76 53 $7,121 $6,819 38% 0.04 0.07 0.05 0.10 1.03 2.04 10.93 0.38 0.52 4.43 6.36 Desired 400+ Beds Position' 1.84 1.50 0.38 44 119 52 $7,517 $7,399 38% 0.04 0.17 0.05 0,09 1.06 2.21 11.19 0.59 0.48 5.13 4.24 Above Above Above Below Above Below Above Below Below Above Varies Above Above Above Above Below Below Above Above Above "Al ratio values, except for quick, acid test, and salary and benefit expense as a percentage of operating expense ratios, were obtained from Optum Insight, 2013 Almanac of Hospital Financial and Operating indicators, 2011/2010 median value data. The quick, acid test, and salary and benefit expense as a percentage of operating experse ratios were obtained from 2010 CMS cost report data. These are true up to a certain point. For example, in general the higher the better for the current ratio, but after a certain point, the organization might be better off investing some of the excess cash. EXHIBIT 4.27b BALANCE SHEET FOR WAKELAND COMMUNITY HOSPITAL Wakeland Community Hospital Balance Sheet December 31, 20X1 and 20X0 (in thousands) 20X1 Current assets Cash and cash equivalents. Net patient accounts receivables Inventories Other current assets Total current assets Plant, property, and equipment Gross plant, property, and equipment (Less accumulated depreciation) Net property, plant, and equipment Funded depreciation/board-designated funds Cash and short-term investments Total assets Current liabilities Accounts payable Salaries payable Notes payable Total current liabilities Long-term liabilities Bonds payable Total long-term liabilities Net assets Total liabilities and net assets $40,500 39,500 3,800 6,500 90,300 215,000 (65,000) 150,000 185,000 $425,300 $14,500 4,500 4,300 23,300 60,000 60,000 342,000 $425,300 20X0 $35,500 36,400 4,000 5,200 81,100 175,500 (107,000) 68,500 110,000 $259,600 $8,500 3,500 4,500 16,500 27,500 27,500 215,600 $259,600 REVENUES WEEK THREE-PRACTICAL EXERCISE Exhibit 4.27a Wakeland Community Hospital Statement of Operations (in thousands) For the Years Ended December 31, 20x1 and 20x0 Net patient service revenue Other operating revenue Total operating revenues OPERATING EXPENSES Current assets Salaries and benefits Supplies and other expenses Depreciation Interest Total operating expense INCOME FROM OPERATIONS NON-OPERATING INCOME Investment income/contributions Excess of revenues over expenses Net Income Cash and cash equivalents Net patient accounts receivables Inventories Other current assets Accounts payable Salaries payable Notes payable Total Current Assets Plant, property, and equipment Gross plant, property, and equipment (less accumulated depreciation) Net property, plant and equipment Funded depreciation/board-designated funds. Cash and short-term investments Total assets Current liabilities Total current liabilities Long-term liabilities Bonds payable 20X1 Total long-term liabilities Net assets Total liabilities and net assets 225000 6400 231400 124173 85000 12000 4500 225673 5727 7500 13227 13227 20X1 EXHIBIT 4.27b Wakeland Community Hospital Balance Sheet (in thousands) For the Years Ended December 31, 20X1 and 20X0 40500 39500 3800 6500 90300 215000 (65000) 150000 185000 425300 14500 4500 4300 23300 20X0 60000 60000 342000 425300 210000 5700 215700 110167 61000 11300 2500 184967 30733 8500 39233 39233 20X0 35500 36400 4000 5200 81100 175500 (107000) 68500 110000 259600 8500 3500 4500 16500 Percentage Change 20X1-20X0 27500 27500 215600 259600 Percentage Change 20X1-20X0 Percentage of Total Revenues 20X1 Percentage of Total Assets 20X1 CURRENT RATIO QUICK RATIO ACID-TEST RATIO SELECTED LIQUIDITY RATIOS FOR 20X1 WAKELAND COMMUNITY HOSPITAL 20X1 BENCHMARK DESIRED POSITION End of document Week Practical Exercise Instructions Compatibility Modej - Word WEEK THREE PRACTICAL EXERCISE INSTRUCTIONS AND HELP PART 1 OF YOUR EXERCISE HORIZONTAL ANALYSIS - Is a method of analyzing financial statements that looks at the percentage change in a line item from one year to the next. It is calculated by the formula: {(Subsequent Year - Previous Year) / Previous Year} x 100. • Make these calculations and enter into the YELLOW column in both exhibit 4-27a and b. NOTE: the Subsequent year is 20X1, and the Previous Year is 20X0 PART 2 OF YOUR EXERCISE VERTICAL ANALYSIS - Is a method to analyze financial statements that answers the general question: What percentage of one line item is an- other line item? The formula is: (Line Item of Interest/Base Line Item) x 100. • On the Statement of Operations, you are to calculate each line item (the Item of Interest) as a percentage of TOTAL OP- ERATING REVENUES (the Base Line Item). On the Balance Sheet, you are to calculate each line (the Item of Interest) as a percentage of TOTAL ASSETS (Base Line Item). • You are responsible for calculating the vertical analysis for 20X1 only. PART 3 OF YOUR EXERCISE This portion of your exercise is related to calculating RATIOS: • You will only be required to calculate the CURRENT RATIO, QUICK RATIO, and ACID-TEST RATIO for the YEAR 20X1. • You will find the data you need to calculate the ratios in EX- HIBIT 4-27b Balance Sheet for Wakeland Community Hospital, and the formulas and hints are listed below. • Find the benchmark and the desired position in the table on page 185 of your textbook. Be sure to use the correct bench- mark for the size of Lake Community Hospital (310 beds). CURRENT RATIO - In calculating this ratio, be sure to use TOTAL CUR- RENT ASSETS and TOTAL CURRENT LIABILITIES to make your calcula- tion. CURRENT ASSETS CURRENT LIABILITIES QUICK RATIO - In calculating this ratio, consider CASH AND CASH EQUIVALENTS to be the same as CASH+MARKETABLE SECURITIES, and NET RECEIVABLES to be the same as NET PATIENT ACCOUNTS RECEIV- ALBES. Be sure to use TOTAL CURRENT LIABILITIES. CASH + MARKETABLE SECURITIES + NET RECEIVALBES CURRENT LIABILITIES ACID-TEST RATIO - In calculating this ratio, consider CASH AND CASH EQUIVALENTS to be the same as CASH+MARKETABLE SECURITIES, and be sure to use TOTAL CURRENT LIABILITIES. CASH + MARKETABLE SECURITIES CURRENT LIABILITES End of document 185 EXHIBIT 4.16a FINANCIAL RATIOS FOR ALL U.S. HOSPITALS BY BED SIZE Optum & CMS Median Ratio* Hospital Industry Ratio Liquidity ratios Current ratio Quick ratio Acid test ratio Days in accounts receivable Days cash on hand Average payment period, days Revenue, expense, and profitability ratios Operating revenue per adjusted discharge Operating expense por adjusted discharge Salary and benefit expense as a percentage of operating expense Operating margin Nonoperating revenue Return on total assets Return on net assets Activity ratios Total asset turnover ratio Net fixed assets turnover ratio Age of plant ratio Capital structure ratios Long-term debt to net assets ratio Net assets to total assets ratio Times interest earned ratio Debt service coverage ratio 2.11 1.52 0.30 49 86 50 $7 448 $7,197 40% 0.03 0.04 0.04 0.08 1.07 2.12 10.31 0.21 0.54 3.78 3.18 1-99 Beds 100-199 Beds 2.18 1.65 0.35 47 85 45 $7,086 $6,494 40% 0.02 0.05 0.04 0,08 1.19 2.17 10.41 0.18 0.58 3.47 3.51 2.04 1.39 0.18 45 81 51 $6,407 $6,112 38% 0.03 0.03 0.04 0.08 1.03 2.03 10.12 0.31 0.51 3.43 3.63 200-299 Beds 1.88 127 0.20 44 102 56 $6,766 $6,250 3.8% 0.04 0.05 0.04 0.09 0.99 2.11 11.97 0.42 0.47 3.64 3.50 300-399 Beds 1.71 1.42 0.20 48 76 53 $7,121 $6,819 38% 0.04 0.07 0.05 0.10 1.03 2.04 10.93 0.38 0.52 4.43 6.36 Desired 400+ Beds Position' 1.84 1.50 0.38 44 119 52 $7,517 $7,399 38% 0.04 0.17 0.05 0,09 1.06 2.21 11.19 0.59 0.48 5.13 4.24 Above Above Above Below Above Below Above Below Below Above Varies Above Above Above Above Below Below Above Above Above "Al ratio values, except for quick, acid test, and salary and benefit expense as a percentage of operating expense ratios, were obtained from Optum Insight, 2013 Almanac of Hospital Financial and Operating indicators, 2011/2010 median value data. The quick, acid test, and salary and benefit expense as a percentage of operating experse ratios were obtained from 2010 CMS cost report data. These are true up to a certain point. For example, in general the higher the better for the current ratio, but after a certain point, the organization might be better off investing some of the excess cash. EXHIBIT 4.27b BALANCE SHEET FOR WAKELAND COMMUNITY HOSPITAL Wakeland Community Hospital Balance Sheet December 31, 20X1 and 20X0 (in thousands) 20X1 Current assets Cash and cash equivalents. Net patient accounts receivables Inventories Other current assets Total current assets Plant, property, and equipment Gross plant, property, and equipment (Less accumulated depreciation) Net property, plant, and equipment Funded depreciation/board-designated funds Cash and short-term investments Total assets Current liabilities Accounts payable Salaries payable Notes payable Total current liabilities Long-term liabilities Bonds payable Total long-term liabilities Net assets Total liabilities and net assets $40,500 39,500 3,800 6,500 90,300 215,000 (65,000) 150,000 185,000 $425,300 $14,500 4,500 4,300 23,300 60,000 60,000 342,000 $425,300 20X0 $35,500 36,400 4,000 5,200 81,100 175,500 (107,000) 68,500 110,000 $259,600 $8,500 3,500 4,500 16,500 27,500 27,500 215,600 $259,600 REVENUES WEEK THREE-PRACTICAL EXERCISE Exhibit 4.27a Wakeland Community Hospital Statement of Operations (in thousands) For the Years Ended December 31, 20x1 and 20x0 Net patient service revenue Other operating revenue Total operating revenues OPERATING EXPENSES Current assets Salaries and benefits Supplies and other expenses Depreciation Interest Total operating expense INCOME FROM OPERATIONS NON-OPERATING INCOME Investment income/contributions Excess of revenues over expenses Net Income Cash and cash equivalents Net patient accounts receivables Inventories Other current assets Accounts payable Salaries payable Notes payable Total Current Assets Plant, property, and equipment Gross plant, property, and equipment (less accumulated depreciation) Net property, plant and equipment Funded depreciation/board-designated funds. Cash and short-term investments Total assets Current liabilities Total current liabilities Long-term liabilities Bonds payable 20X1 Total long-term liabilities Net assets Total liabilities and net assets 225000 6400 231400 124173 85000 12000 4500 225673 5727 7500 13227 13227 20X1 EXHIBIT 4.27b Wakeland Community Hospital Balance Sheet (in thousands) For the Years Ended December 31, 20X1 and 20X0 40500 39500 3800 6500 90300 215000 (65000) 150000 185000 425300 14500 4500 4300 23300 20X0 60000 60000 342000 425300 210000 5700 215700 110167 61000 11300 2500 184967 30733 8500 39233 39233 20X0 35500 36400 4000 5200 81100 175500 (107000) 68500 110000 259600 8500 3500 4500 16500 Percentage Change 20X1-20X0 27500 27500 215600 259600 Percentage Change 20X1-20X0 Percentage of Total Revenues 20X1 Percentage of Total Assets 20X1 CURRENT RATIO QUICK RATIO ACID-TEST RATIO SELECTED LIQUIDITY RATIOS FOR 20X1 WAKELAND COMMUNITY HOSPITAL 20X1 BENCHMARK DESIRED POSITION End of document

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