Financial ratios help stakeholders and potential investors to determine the sustainability and potential profitability of an organization. Performing a ratio analysis on the financial statements provides stakeholders and investors with insight of how the organization has performed. The ratios are an indicator as to the financial health of the organization. Healthcare providers should track the operating margin, operating EBIDA margin, days cash on hand, debt to capitalization, and capital spending ratios (Becker's Hospital Review, 2012). Why are these ratios important to the healthcare industry?

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financial ratios assist the outside as well as internal customers of the organisation in ascertaining the functioning and profitability of the organis... View the full answer