* Table 3.1: Sunnyvale Clinic: Income Statements Years Ended December 31, 2007 and 2006, p. 75 (also known as the Statement of Operations) * Table 4.1: Sunnyvale Clinic: Balance Sheet December 31, 2007 and 2006, p. 96
Using Tables 3.1 and 4.1, calculate the 12 ratios for both years: 2006 and 2007. Note that the terms differ slightly in the Gapenski text, so I am providing the formulas using Gapenski's terminology to avoid confusion. A. Common Liquidity Ratios 1. Current ratio = Total Current Assets in Balance Sheet / Total Current Liabilities in Balance Sheet 2. Days Cash on Hand = Cash in Balance Sheet / [(Total Expenses – Depreciation – Provision for Bad Debts in Income Statements)/365] 3. Days in A/R = Net Patient Accounts Receivable in Balance Sheet / (Net Patient Service Revenue in Income Statements/365) B. Common Profitability Ratios 4. Operating margin = Net Income in Income Statements / Total Revenues in Income Statements 5. Return on total assets = Net Income in Income Statements / Total Assets in Balance Sheet 6. Return on net assets = Net Income in Income Statements / Net Assets in Balance Sheet C. Common Capital Structure Ratios 7. Debt to capitalization = Long-term Debt in Balance Sheet / Long term debt + Net Assets in Balance Sheet 8. Times interest earned = (Net Income + Interest) in Income Statements / Interest in Income Statements 9. Debt service coverage = (Net Income + Interest + Depreciation) in Income Statements / Interest + 10 million (given) D. Common Activity/ Productivity Ratios 10. Fixed asset turnover = Total Revenues in Income Statements / Net Fixed Assets in Balance Sheet 11. Average age of plant = Accumulated Depreciation in Balance Sheet / Depreciation Expense in Income Statements 12. Salary and benefits as a % of net patient