Patton-Fuller Ratio Computation Essay Sample
1. The Current Ratio. 5. 41 to 1 ( 2009 ) and 15. 5 to 1 ( 2008 ) . are due to a lessening in current assets of $ 1. 159. and an addition in current liabilities of $ 15. 427. which indicates a 10. 1 to 1 alteration from 2008 to 2009 in the ratio of assets to liabilities. This public presentation measuring shows that the hospital assets dropped while the liabilities increased. The addition of $ 22. 121 in Histories Receivables is lending to the diminishing ability of the infirmary to pay its short term debts. In respect to the CEO statement that every fiscal ratio has improved. we disagree with that statement because the study shows clearly that the Current Ratio dropped from 2008 to 2009. 2. The Quick Ratio are 3. 47 to 1 ( 2009 ) and 9. 49 to 1 ( 2008 ) . The chief difference between the Current Ratio and the Quick Ratio is that Quick Ratio used hard currency. hard currency equivalents. and histories receivable/current liabilities in opposed to the entire current assets/current liabilities. We stand in strong dissension with the CEO statement that all countries of fiscal ratio have improved ; because under careful observation and computations they have they have non.
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3. The Days Cash on Hand are 19. 7 yearss ( 2009 ) and 36. 3 yearss ( 2008 ) due to important addition in entire liabilities amid the old ages of comparing and non adequate additions in assets to countervail the difference. Again. the Chief executive officer explained the usage of hard currency to purchase equipment and stock list. However. the CEO did non explicate how the unfavourable addition in Accounts Receivable besides absorbed 1000000s in hard currency. 4. The Days Receivables are 47. 15 ( 2009 ) and 32. 63 ( 2008 ) . efficaciously taking about $ 22. 121 in hard currency from the installation and go forthing that hard currency in the custodies of the remunerators. An addition in the yearss receivable means that more gross will go more hard to roll up. This calculation shows that charge and aggregation public presentation has declined. Once once more we do non hold with CEO that every fiscal ratio has improved due to the 14. 52 twenty-four hours addition in day’s receivable.
5. The Debt Service Coverage Ratio ( DSCR ) is 2. 76 ( 2009 ) and 3. 0 ( 2008 ) due to the $ 16. 473 addition in hard currency and the $ 10. 414 addition in “Maximum Annual Debt Service” . The debt ratio improved from 2008 to 2009. 6. The alteration in the Liabilitiess to Equity Ratio was 3. 65 ( 2009 ) and 0. 64 ( 2008 ) . This unfavourable alteration is caused by holding high liabilities and low Retained Net incomes ( or “Net Worth” ) . Major subscribers to this job were the important addition in long term debt and the decreasing diminution in the unrestricted fund balance. 7. The Operating Margins are 0. 15 % ( 2009 ) and -3. 82 % ( 2008 ) comparing a 3. 65 % addition in net income border. 8. Return on Entire Assetss was 22 % ( 2009 ) and 61. 7 % ( 2008 ) . due to the betterment in Operating Income and the comparatively little addition in Entire Assets. Based on the audited fiscal statements. the eight ratios show that some of the return does non positively reflect the return on entire assets. Audited Fiscal Statement
1. The Current Ratio ( 2008 ) 15. 5 to 1 ( 2009 ) 5. 4 to 1“unaudited” statements. due to the lessening in current assets every bit good as an addition in liabilities. which indicates a 10. 1 to 1 alteration in the ratio of assets to liabilities. 2. The Quick Ratio ( 2008 ) 9. 49 to 1 ( 2009 ) 3. 44 to 1. due to an audit accommodation to Net Histories Receivable. This ratio indicates a lessening in the ratio of assets to liabilities. 3. The Days Cash on Hand ( 2008 ) 37 yearss ( 2009 ) 19. 6 yearss “unaudited” statements. due to expenditure of hard currency and the lessening in Accounts Receivable.
4. The Days Receivables. once more efficaciously taking 1000000s in hard currency from the installation and go forthing it in the custodies of the remunerators. Due to the accounting method used at the infirmary ( Provision for Doubtful Accounts is shown as an “expense” and does non straight cut down “Net Patient Revenue” ) . the consequence of the $ 1 million audit accommodation was non as apparent in this ratio. 5. The Debt Service Coverage Ratio ( 2008 ) 3. 0 to 1 ( 2009 ) 2. 69 to 1 unaudited statement. due to the audit accommodation of $ 1 million. Again. the “non-cash” disbursals ( depreciation. amortisation ) are large factors in the calculation of this ratio. 6. The Liabilities to Equity Ratio ( ratio of what is “owed” to what is “owned” showed the same unfavourable alteration. due to scrutinize. 7. The Operating Margin showed a addition ( due to the audit accommodation ) . which is different from that reported on the “unaudited” fiscal statements nevertheless. the grosss and disbursals “breakeven” . 8. Return on Entire
Assetss ( 2008 ) -0. 0354 % ( 2009 ) -0. 57 % “breakeven” . due to worsen in Operating income ( once more. non every bit much as was indicated via the unaudited fiscal statements ) . Net Receivables ? Net Credit Revenue/No. of Days in Period