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Assessment of Hospital Financial Performance

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Write a 4 page case review that assesses hospital financial performance from attached table. Review should also interpret the hospital's statements of cash flow; present an overview of the hospital's financial position using the Du Pont equation as a guide; Use ratio analysis to identify the hospital's specific financial strengths and weaknesses; use operating indicator analysis to identify potential factors that explain the current financial condition. Summarize the evaluation of the hospital's financial condition and make any recommendations for future financial soundness.

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Solution summarizes the evaluation of the hospital's financial condition and make any recommendations for future financial soundness

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Ratios help in assessing the performance of the organization. Ratios are useful in identifying the strengths and weaknesses of the organization. It aids in comparison and to do benchmarking. Ratios will help the managers in evaluation, understanding and controlling the financial planning process. It will also help in finding out the funds requirement, profitability, solvency and liquidity position of the organization. Let us start with DuPont analysis.

The Du Pont equation is particularly useful:
ROE = Profit Margin x Total Assets Turnover x Equity Multiplier
= Net Income / Sales x Sales / Total Assets x Total Assets / Common Equity

Hence this model can be used to gauge following about the company:
1. Asset utilization: as its utilization of the assets ...

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