Attached is a copy of a excel sheet for question #7.
Unit 2 Written Assignment: Course Material: 5 Finkler, S. A. Financial Management for Public, Health, and Not-For Profit Organizations. Upper Saddle River, NJ: Prentice Hall, 2000, 470. 6 Gapenski, L. C. Healthcare Finance: An Introduction to Accounting and Financial Management. Chicago, IL: Health Administration Press, 1998, 107.
Answer the following:
1. Do not-for-profit health care organizations earn a profit (assuming that they are financially successful)? If so: a. How do they show it on the income statement? b. What do they do with any such profit?
2. What is the difference between net income and cash flow?
3. Using the following financial statement information for four not-for-profit clinics, fill in the missing values labeled a through h:
December 31, 1997: Clinic A Clinic B Clinic C Clinic D
Assets $ 80,000 $100,000 a $150,000
Liabilities $50,000 b $ 75,000 c
Equity d $ 60,000 $ 45,000 $ 90,000
December 31, 1998:
Assets e $130,000 $180,000 f
Liabilities $ 55,000 $ 62,000 g $ 80,000
Equity $ 45,000 h $110,000 $145,000
4. Explain why financial ratios are more meaningful for financial analysis than individual entries.
5. What is meant by the term "liquidity" as applied to an organization's financial health, and what are two ways it is measured?
6. Do the following categories of ratios get their information from the balance sheet, the income statement, or both? a. Liquidity Ratios b. Profitability Ratios c. Turnover Ratios d. Capitalization Ratios
7. Using the financial statements of St. Ann's Hospital on p. 88 of the Neumann text (problem 3-11), compute the following ratios:
a. Current Ratio
b. Operating Margin
c. Return on Assets
d. Long-Term Debt Ratio
What do the results tell you about the financial health of the hospital?
Computations and discussion given in everyday language so you can "get it."