Compute the following ratios from Arcadia Hospital’s 2005 financial statements:o Current ratioo Total asset• Compare these ratios with the 1999 median for all U.S. acute care hospitals listed in Table 4-2.•
Answer the following and explain your answer:
What was the financial status of Arcadia in 2005?
Compute the following ratios from Arcadia Hospital’s 2005 financial statements:
Asset/equity
o Long-term debt/equity
o Total margin
• Explain whether the ratios are leverage or profitability ratios. If a leverage ratio, is it coverage orcapital structure? What is the difference between the two? If a profitability ratio, discuss why it isnot completely satisfactory for measuring an organization’s profitability. What can these ratios tellus about Arcadia?•
Post your computations, comparisons, and answers as a Microsoft® Word attachment.
Table 4-2 Ten useful financial ratiosMedian for All U.S.Acute Care Hospitals,1999
Current ratio 2.07
Inventory turnover 50.35
Total asset (Contd.)
