Assessment #4: Ratio Analysis

Assessment #4: Ratio Analysis (15%)

• Write a 4-6 page paper in which you discuss the value of ratio analysis in decision making for health care organizations. Complete the following in your paper: 
• Discuss the meaning of ratio analysis in healthcare.
• Pick only one (1) ratio from EACH major group from the financial statements. (e.g. Current ratio, ROE, Debt to equity, ALOS)
• Major Groups:

  Liquidity ratios (Current ratio, Days Cash-on-Hand, Quick Ratio)
  Profitability ratios (ROE, ROA, Total Margin, Operating Margin)
  Leverage/Capital Structure Ratios (Debt ratio, Equity ratio, Debt to Equity Ratio)
  Nonfinancial Ratios (Occupancy rate, payer mix, ALOS, Expense per discharge, FTE per bed, HMO penetration)

• Discuss one (1) ratio (from EACH major group) using the following criteria:

  What is the meaning of each ratio?
  Evaluate the meaning of the ratio related to the financial health of the health care organization. Show the calculations.
  Explain the factors that affect the results related to the financial health of the organization. 

You can also utilize the sample Help4UHMO Organization financial statements (located under week 6) or a real-life health care organization to evaluate by researching their financial statements. Show relevant calculations.

• Format your paper consistent with APA guidelines.
• Provide a minimum of two (2) cited sources in your paper. Properly cite in APA format.

You will be graded base on the following rubric:

Income Statement

and Other Income

and Drugs

Insurance

Interest

Help4U

HMO

Income Statement and Change in Net

Assets

Year Ended

June 30, 2015

(in thousands)

Revenue:

Premiums Earned

$26,682

Co-

Insurance

1,689

Interest

242

Total Revenue

$28,613

Expenses:

Salaries and Benefits

$15,154

Medical

Supplies

7,507

3,963

Provision for Bad Debt

19

Depreciation

367

385

Total Expenses

$27,395

Net Income

$1,218

Net Assets, Beginning of Year

$900

Net Assets, End of Year

$2,118

Non-Financial Indicator Data

Non-Financial Indicators

HMO

	Help4U HMO
Number of Occupied Beds	26350
Total Beds	32000
Total Length of Stay per Discharge	1000
Total Discharged Patients	250
Total FTE’s	700
Total Patient Days	2500
Payer	UOS
Medicare	328
Medicaid	125
450
Commerical	800
Uninsured	225

Balance Sheet

Help4U HMO

Balance Sheet
June 30, 2015

(in thousands)

Assets
Supplies

Long-Term Debt

$2,118

$9,869

Cash and Cash Equivalents	$2,737
Net Premiums Receivable	821
387
Total Current Assets	$3,945
Net Property and Equipment	$5,924
Total Assets		$9,869
Liabilities and Net Assets
Accounts Payable Medical Services	$2,145
Accrued Expenses	$929
Notes Payable	$141
Current Portion of	Long-Term Debt	$241
Total Current Liabilities	$3,456
$4,295
Total Liabilities	$7,751
Net Assets (Equity)
Total Liabilities and Net Assets

Industry Benchmarks

Industry Benchmarks

Total Margin	3.80%
Return on Equity	25.50%
Return on Assets	8.00%