What is the solution to 17.7 Problem B?

17.7. Heart Hospital
The following financial information is given:
The Heart Hospital
Balance Sheet
September 30, 2015
	(in 000s)
ASSETS
Current assets:
Cash	$14,202
Accounts receivable, net	5,918
Medical supplies inventory	1,211
Prepaid expenses and other current assets	1,429
Total current assets	$22,760
Property, plant and equipment, net	$33,769
Other assets	901
Total Assets	$57,430
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$1,910
Accrued compensation and benefits	2,543
Other accrued liabilities	1,843
Current portion of long-term debt	2,064
Total current liabilities	$8,360
Long-term debt	21,640
Total liabilities	$30,000
Owner's equity	$27,430
Total liabilities and owner's equity	$57,430
The Heart Hospital
Statement of Operations
Year ended September 30, 2015
	(in 000s)
Patient service revenue net of dis/allow	$66,962
Provision for bad debt	(2,457)
Net patient service revenue	$64,505
Operating expenses
Personnel expense	$21,707
Medical supplies expense	15,047
Other operating expenses	9,721
Depreciation expense	2,625
Total operating expenses	$49,100
Income from operations	$15,405
Other income (expense)
Interest expense	($1,322)
Interest and other income, net	159
Total other income (expense), net	($1,163)
Net Income	$14,242
a. Perform a Du Pont analysis on The Heart Hospital. Assume that the industry average ratios are as follows:
Total Margin	15.00%
Total asset turnover	1.5
Equity multiplier	1.67
Return on Equity	37.60%
b. Calculate and interpret the following ratios for The Heart Hospital:
	Industry	HeartHosp
Return on Assets	22.50%
Current Ratio	2.0
Days cash on hand (days)	85
Average collection period (days)	20
Debt ratio	40%
Debt-to-Equity ratio	0.67
Times interest earned (TIE) ratio	5.0
Fixed Asset turnover ratio	1.4