Westside Clinic's Financial Ratios
Ratio Analysis
Review Chapter 12 of Baker's Health Care Finance: Basic Tools for Nonfinancial Managers.
Review the profitability, liquidity, capital structure, and turnover ratios for Westside Clinic.
Conduct a strategic assessment based on the health care data presented for Westside Clinic.
Analyze the profitability, liquidity, capital structure, turnover ratios, and financial ratios calculated for Westside Clinic to state its financial position.
Develop a perspective on long-term financial trends for the clinic.
Assess the potential financial impact on the clinic's organizational strategy and potential implications on patient care based on the benchmark data provided.
Write a 3–5 page paper based on the above.
Submission Requirements
Your paper should meet the following requirements:
Written communication: Your document should clearly identify where each grading criteria or part of the assignment is addressed by using APA-formatted headings and subheadings. Your writing needs to communicate professionally, with correct English usage. Your points must be logical, substantive, and relevant based on the evidence presented. In addition, your communication should be free of errors that detract from the overall message.
APA formatting: Resources and citations are formatted according to APA style and formatting.
Documents to be submitted: You need to submit the following:
Spreadsheets.
Word document: 3–5 pages with APA-formatted headings and subheadings.
Font and font size: Times New Roman, 12 point.
Submit the documents in the assignment area by midnight CST Sunday.
Be sure to review the scoring guide to understand how the assignment will be graded.
Resources
Ratio Analysis Scoring Guide.
Evidence and APA.
APA Style Paper Template [DOCX].
APA Style Paper Tutorial [DOCX].
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Baker's Health Care Finance: Basic tools for nonfinancial manger
ISB # 9781284280883
Let me know as soon as possible if you have that. Because the work is based on chapter 12 of the book. Thanks
Financial Ratios
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Financial Ratios
Introduction
Financial ratios are essential tools for determining the financial health of an organization as they provide an overview of the financial performance of a given organization. In healthcare financial management, financial ratios facilitate the comparative analysis of a given organization to determine the extent to which managers in healthcare settings utilize the various assets at their disposal to generate returns. An analysis of the Westside Clinic's financial ratios can provide an illustration of the importance of various financial ratios when examining the financial status of a given organization.
Profitability
Profitability ratios are used to determine the extent to which managers generate revenue compared to attracted expenses. The operating margin for Westside Clinic in 2022 is 3.33%, indicating that the clinic generates $0.033 in operating profit for every dollar of revenue. The figure is an improvement from 2021 when the clinic only managed to generate $0.027 for every dollar spent. It is indicative of the effectiveness of managers in generating income for the clinic. The total margin for the Westside is 3.59%, indicating that the clinic generates $0.036 in profit for every dollar of revenue. The return on assets (ROA) is 6.10%, indicating that the clinic generates $0.061 in profit for every dollar of assets. The return on equity (ROE) is 16.75%, indicating that the clinic generates $0.167 in profit for every dollar of shareholder equity. All profitability ratios have positively improved in 2022 compared to 2021 figures, indicating that the clinic is generating more profits from its operations.
Liquidity
The liquidity ratio provides an indication of the extent to which a given organization can be able to meet its short-term obligation. The current ratio for Westside Clinic in 2022 is 1.46, indicating that the clinic has $1.46 in current assets for every dollar of current liabilities. The current ratio indicates that the company’s liquid assets can be effectively used to cover short-term obligations without a need for outside funding. The days' cash on hold is 37.69, indicating that the clinic holds its cash for approximately 38 days before using it. The days in accounts receivable are 58.03, indicating that the clinic collects its accounts receivable in approximately 58 days. Compared to 2021 figures, the current ratio and days cash on hold increased while the days in accounts receivable decreased. To this end, Westside has enhanced its ability to cover the short-term obligation significantly as it has not only increased its current assets but also enhanced its cash collection practices.
Capital Structure
Capital structure ratios describe the solvency of a given financial organization. To this end, one can rely upon capital structure to determine the extent to which a given organization utilizes its long-term debt. The capital structure ratio is also indicative of the efficiency of an organization’s practices in the utilization of long-term debt. The times' interest earned for Westside Clinic in 2022 is 4.50, indicating that the clinic has $4.50 in operating income for every dollar of interest expense. The debt service coverage is 1.81, indicating that the clinic generates $1.81 in cash flow for every dollar of debt service paym...