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    Charles S. Lewis has just been named the CEO of Community Ho

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    Charles S. Lewis has just been named the CEO of Community Hospital, a 230-bed hospital located in an agricultural community of approximately 150,000 people. There is one other similar-sized hospital in the community. C.S. Lewis has been told by his CFO, J.R.R. Tolkein, that the hospital is in excellent financial condition, but Mr. Lewis is not convinced. He has requested and received the summary financial statements presented in Table 10-10.

    226 CHAPTER 10 ANALYZING FINANCIAL STATEMENTS
    Table 10-10 Summary Financial Information of Community Hospital* (2003-2007) (Data in Thousands)
    2003 2004 2005 2006 2007

    Balance sheet accounts
    Cash & cash equivalents $ 34,402 $ 30,444 $ 45,848 $ 46,010 $ 73,711
    Patient accounts receivable 39,506 38,878 35,444 38,853 35,647
    Inventory 2,133 2,318 2,398 3,197 3,279
    Gross fixed assets 187,278 221,548 240,988 256,652 276,458
    Accumulated depreciation 73,227 79,523 89,324 101,007 113,851
    Net fixed assets 114,051 142,025 151,664 155,645 162,607
    Unrestricted capital funds 10,720 13,625 20,160 25,615 17,716
    Total assets $ 238,365 $ 265,784 $ 276,965 $ 287,193 $ 311,140
    Current maturities of LTD 111 1,794 1,431 2,211 1,143
    Current liabilities $ 37,426 $ 38,492 $ 33,240 $ 31,699 $ 35,862
    Long-term debt 2,032 12,821 11,720 9,578 9,570
    Net assets $ 188,743 $ 204,262 $ 222,606 $ 237,022 $ 251,241

    Income statement accounts
    Net patient revenue $208,861 $ 225,950 $ 244,976 $ 257,784 $ 282,461
    Other revenue 1,569 1,756 1,929 2,170 1,757
    Total operating revenue $ 210,430 $ 227,706 $ 246,905 $ 259,954 $ 284,218
    Total operating expenses $ 203,043 $ 219,768 $ 233,867 $ 254,382 $ 278,629
    Operating income 7,387 7,938 13,038 5,572 5,589
    plus Non-operating revenue 6,806 7,579 8,971 8,430 8,696
    Excess of revenue over expenses $ 14,193 $ 15,517 $ 22,009 $ 14,002 $ 14,285
    Depreciation $ 10,588 $ 11,161 $ 11,659 $ 12,184 $ 12,524
    Interest 115 611 471 419 392

    *Please note that not all asset and liability items are shown. The totals do not, therefore, foot to the individual account values.

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    Charles S. Lewis has just been named the CEO of Community Hospital, a 230-bed hospital located in an agricultural community of approximately 150,000 people. There is one other similar-sized hospital in the community. C.S. Lewis has been told by his CFO, J.R.R. Tolkein, that the hospital is in excellent financial condition, but Mr. Lewis is not convinced. He has requested and received the summary financial statements presented in Table 10-10.

    226 CHAPTER 10 ANALYZING FINANCIAL STATEMENTS
    Table 10-10 Summary Financial Information of Community Hospital* (2003-2007) (Data in Thousands)
    2003 2004 2005 2006 2007

    Balance sheet ...

    Solution Summary

    Charles S. Lewis has just been named the CEO of Community Hospital, a 230-bed hospital located in an agricultural community of approximately 150,000 people. There is one other similar-sized hospital in the community. C.S. Lewis has been told by his CFO, J.R.R. Tolkein, that the hospital is in excellent financial condition, but Mr. Lewis is not convinced. He has requested and received the summary financial statements presented in Table 10-10.

    226 CHAPTER 10 ANALYZING FINANCIAL STATEMENTS
    Table 10-10 Summary Financial Information of Community Hospital* (2003-2007) (Data in Thousands)
    2003 2004 2005 2006 2007

    Balance sheet accounts
    Cash & cash equivalents $ 34,402 $ 30,444 $ 45,848 $ 46,010 $ 73,711
    Patient accounts receivable 39,506 38,878 35,444 38,853 35,647
    Inventory 2,133 2,318 2,398 3,197 3,279
    Gross fixed assets 187,278 221,548 240,988 256,652 276,458
    Accumulated depreciation 73,227 79,523 89,324 101,007 113,851
    Net fixed assets 114,051 142,025 151,664 155,645 162,607
    Unrestricted capital funds 10,720 13,625 20,160 25,615 17,716
    Total assets $ 238,365 $ 265,784 $ 276,965 $ 287,193 $ 311,140
    Current maturities of LTD 111 1,794 1,431 2,211 1,143
    Current liabilities $ 37,426 $ 38,492 $ 33,240 $ 31,699 $ 35,862
    Long-term debt 2,032 12,821 11,720 9,578 9,570
    Net assets $ 188,743 $ 204,262 $ 222,606 $ 237,022 $ 251,241

    Income statement accounts
    Net patient revenue $208,861 $ 225,950 $ 244,976 $ 257,784 $ 282,461
    Other revenue 1,569 1,756 1,929 2,170 1,757
    Total operating revenue $ 210,430 $ 227,706 $ 246,905 $ 259,954 $ 284,218
    Total operating expenses $ 203,043 $ 219,768 $ 233,867 $ 254,382 $ 278,629
    Operating income 7,387 7,938 13,038 5,572 5,589
    plus Non-operating revenue 6,806 7,579 8,971 8,430 8,696
    Excess of revenue over expenses $ 14,193 $ 15,517 $ 22,009 $ 14,002 $ 14,285
    Depreciation $ 10,588 $ 11,161 $ 11,659 $ 12,184 $ 12,524
    Interest 115 611 471 419 392

    *Please note that not all asset and liability items are shown. The totals do not, therefore, foot to the individual account values.

    $2.19