Stevens Hospital is the public hospital for District No. 2 of Snohomish County, Washington. As such a significant portion of the nonoperating revenues listed in the Income Statement are generated by taxes. Discuss the advantages and disadvantages of being supported by taxes.

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Indicator Profitability Total Margin% Excess margin % Operating margin % Return on net assets (equity) % Liquidity Current ratio Days in Patient Accounts Receivable Days cash on hand, short-term sources Days cash on hand, all sources Average payment period Capital Structure (Debt Management) Net asset financing % Long-term debt to capitalization % Debt service coverage Cash flow to debt % Asset Efficiency (Activity) Total Asset Turnover Fixed Asset Turnover Current Asset Turnover Stevens Hospital Ratio Analysis Ratio Computations 2008 2007 Average Age of Plant Inventory Turnover |N/A 3.21 3.29 0.88 18.92 1.23 50.71 23.85 40.94 85.93 28.86 47.29 1.60 18.50 1.70 4.25 3.72 66.44 N/A 1.68 1.73 (1.02) 11.41 1.34 60.64 23.07 31.53 70.09 23.22 63.11 1.74 13.13 1.58 3.79 4.11 63.57 Industry Standards Trend S&P "A" Rated Hosp N/A 3.70% N/A 4.70% 2.08 59.20 23.80 104.60 47.50 59.50% 28.30% 5.14 19.50% 0.90 1.78 3.89 8.09 77.85 F F F F F U F F U N/A F Standard N/A U N/A F N/A Indicator Profitability Total Margin% Excess margin % Operating margin % Return on net assets (equity) % Liquidity Current ratio Days in Patient Accounts Receivable Days cash on hand, short-term sources Days cash on hand, all sources Average payment period Capital Structure (Debt Management) Net asset financing % Long-term debt to capitalization % Debt service coverage Cash flow to debt % Asset Efficiency (Activity) Total Asset Turnover Fixed Asset Turnover Current Asset Turnover Stevens Hospital Ratio Analysis Ratio Computations 2008 2007 Average Age of Plant Inventory Turnover |N/A 3.21 3.29 0.88 18.92 1.23 50.71 23.85 40.94 85.93 28.86 47.29 1.60 18.50 1.70 4.25 3.72 66.44 N/A 1.68 1.73 (1.02) 11.41 1.34 60.64 23.07 31.53 70.09 23.22 63.11 1.74 13.13 1.58 3.79 4.11 63.57 Industry Standards Trend S&P "A" Rated Hosp N/A 3.70% N/A 4.70% 2.08 59.20 23.80 104.60 47.50 59.50% 28.30% 5.14 19.50% 0.90 1.78 3.89 8.09 77.85 F F F F F U F F U N/A F Standard N/A U N/A F N/A

Answer rating: 100% (QA)

Advantages of being supported by taxes Stable funding Taxbased funding provides a reliable and predictable income stream for the hospital allowing for ... View the full answer