Assignment: Application: Basic Financial Calculations

Before you learned algebra, you first had to learn basic addition, subtraction, multiplication, and division. Similarly, before you can fully understand the finances of a health care organization, you first need to be able to apply basic financial calculations used in almost all domains of accounting. A firm grasp of these accounting concepts will better enable you to confidently make budgetary and resource decisions. In this Assignment, you complete calculations that will familiarize you with some of the necessary basic accounting concepts.

Based on the information and financial statements below, calculate the following financial ratios in an Excel Spreadsheet:

• Current Ratio

= Total Current Assets / Total Current Liabilities

• Days of Cash on Hand

= Cash / (Total Operating Expense / 365 days)

• Age of Accounts Receivable

= Accounts Receivable / (Net Patient Service Revenue / 365)

• Age of Physical Plant

= Accumulated Depreciation / Depreciation Expense

• Debt to Equity Ratio

= [Long Term] Debt / Net Assets

• Debt to Assets Ratio

= [Long Term] Debt / Total Assets

• Collection Rate

= Net Patient Service Revenue / Gross Patient Service Revenue

• Operating Margin Ratio

= Gain or (Loss) from Operations / Net Patient Service Revenue

Note: For those Assignments in this course that require you to perform calculations you must:

• Use the ‘Week 3 Application Assignment Template’ from your Learning Resources
• Show all your calculations and formulas in the spreadsheet

A title and reference page are NOT needed in this assignment. Put your name and assignment at the top of the Excel spreadsheet.

For those not comfortable with the use of Microsoft Excel, this week’s Optional Resources suggest several tutorials.

To prepare:

• Review the information in this week’s Learning Resources dealing with ratios and how they are calculated.

• View the Week 3 Application Assignment Tutorial: Ratio Calculations, (video) provided in this week’s Learning Resources.
• Use the Week 3 Application (Scenario) Assignment Template, provided in this week’s Learning Resources, to complete this assignment.
• Review the Statement of Revenues and Expenses in the Week 3 application (scenario) assignment template. With the information, calculate the financial ratios

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Name: Assignment: Date: Name: Course: Current Ratio = total current assets/ total current liabilities Note: in B cell 2,27 calculation is included Days of Cash on Hand = cash/(total operating expense/365) Age of Accounts Receivable = accounts receivable, less allowance for doubtful accounts/(net patient service revenue/365) You will receive a negative number..change to a positive number (Erase information in this cell and put positive number here. Age of Physical Plant = accumulated depreciation/depreciation Debt to Equity Ratio = Long Term Debt/Balance at June 30, 20×2-Total net assets Debt to Assets Ratio = Long TermDebt/total assets Collection Rate = net patient service revenue/gross patient service revenue Operating Margin Ratio = gains or loss from operations/net patient service revenue ABC General Hospital Statement of Revenue and Expenses – June 30, 20X2 Assets Current Assets Cash Accounts Receivable less allowance for doubtful accounts Inventory Total Current Assets $1.985.000 3.720.000 550.000 $6.255.000 Name: Assignment: Date: Fixed Assets Plant and Equipment Less Accumulated Depreciation Total Fixed Assets $10.000.000 -3.770.000 $6.230.000 Total Assets $12.485.000 Liabilities and Net Assets Current Liabilities Accounts Payable Accrued Accounts Payable Total Current Liabilities $1.900.000 850.000 $2.750.000 Long Term Debt Pension Liability Total Liabilities Net Assets Balance at June 30, 20X1 Gain or (Loss) from Operations 2.800.000 1.250.000 6.800.000 4.775.000 910.000 Balance at June 30, 20X2 – Net Assets $5.685.000 Total Liabilities and Net Assets Gross Patient Service Revenue Inpatient Revenue Outpatient Revenue Total Gross Patient Service Revenue $12.485.000 $8.250.000 2.275.000 $10.525.000 Name: Assignment: Date: Less: Discounts Net Patient Revenue -1.455.250 $9.069.750 Operating Expenses Salaries & Benefits Supplies and Services Interest Depreciation $5.110.000 2.829.750 100.000 120.000 Total Operating Expense Gain or (Loss) from Operations $8.159.750 $910.000

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