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    Louisville Community Hospital Ratio Analysis

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    Healthcare Financial Management and Economics

    — Louisville Community Hospital

    Assignment 1: Ratio Analysis

    It is important to understand that when interpreting financial statements, the numbers alone may not provide the whole financial picture of an organization. Instead, you must analyze the statements using ratios, which are then compared to benchmarks across the healthcare industry. For this Assignment, you examine the financial documents for Louisville Community Hospital and analyze the organization's financial health.

    Louisville Community Hospital

    Louisville Community Hospital is a small community hospital serving a rural population.

    Louisville Community Hospital
    Statement of Operations (in thousands) for the
    Years Ended December 31, 2016 and 2017

    Net patient service revenue $23,000 $19,000
    Net assets released from restriction 1,000 800
    Total operating revenues 24,000 19,800

    Salaries and benefits 13,000 9,000
    Supplies and other expenses 7,000 6,000
    Depreciation 2,500 2,000
    General services 200 100
    Total operating expenses 22,700 17,100

    Operating income 1,300 2,700
    Non-operating income 4,000 2,500

    Excess of revenues over expenses 5,300 5,200

    Increase (decrease) in net assets $5,300 $5,200

    Louisville Community Hospital
    Balance Sheet (in thousands)
    for the Years Ended December 31, 2016 and 2017

    2016 2017
    Current assets
    Cash and cash equivalents $700 $500
    Net patient receivables 4,000 3,500
    Inventory 950 750
    Total current assets 5,650 5,250

    Non-current assets
    Plant, property, and equipment
    Gross plant, property, and equipment 26,500 24,000
    (less accumulated depreciation) (18,000) (17,000)
    Net plant, property, and equipment 8,500 7,000

    Board-designated funds 18,000 9,000

    Total assets 32,150 21,250

    Current liabilities
    Accounts payable 2,500 2,000
    Accrued expenses 900 750
    Total current liabilities 3,400 2,750

    Long-term liabilities
    Bonds payable 6,500 8,000
    Total long-term liabilities 6,500 8,000

    Net assets 22,250 10,500

    Total liabilities and net assets $32,150 $21,250

    To prepare for this Assignment:

    Examine the financial statements from Louisville Community Hospital. Reflect on how you will use this financial data to calculate and analyze the organization's financial ratios. Refer to Chapter 4 of Financial Management of Health Care Organizations: An Introduction to Fundamental Tools, Concepts and Applications for additional guidance.

    The Assignment:

    Using the statement of operations and balance sheet for Louisville Community Hospital, complete the Week 8 Ratio Excel Template located in the Week 8 Learning Resources.

    Your Assignment is due by Day 7 of Week 8.

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    Solution Summary

    Calculation of ratios for Louisville Community Hospital