Questions:

17.1a. What is the primary difference between financial statement analysis and operating indicator analysis?

b. Why are both types of analyses useful to health managers and investors?

17.4a. Assume that Kindred Healthcare and Sun Healthcare Group, two operators of nursing homes, have fiscal years that end at different times-- say, one in June and one in December. Would this fact cause any problems when comparing ratios between the two companies?

b. Assume that two companies that operate walk-in clinics both had the same December year-end, but one was based in Aspen, Colorado, a winter resort, while the other operated in Cape Cod, Massachusetts, a summer resort. Would their locations lead to problems in a comparative analysis?

17.6a. What is the difference between trend analysis and comparative analysis?

b. Which is more important?

Problems:

17.1a. Modern Medical Devices has a current ratio of 0.5. Which of the following actions would improve (i.e., increase) this ratio?

Use cash to pay off current liabilities.

Collect some of the current accounts receivable.

Use cash to pay off some long-term debt.

Purchase additional inventory on credit (i.e., accounts payable).

Sell some of the existing inventory at cost.

b. Assume that the company has a current ratio of 1.2. Now which of the above actions would improve this ratio?

17.3Riverside Memorial's primary financial statements are presented in exhibits 17.1, 17.2, and 17.3. (see below)

1. Calculate R