[Solved] Law Week 8 Assignment 1- Healthcare Finance

Assignment Prompt & Instructions

**files (5)**

– ## Week8AssignmentInstructions-HealthcareFinance.docx

– ## Week8LearningResources-HealthcareFinance.docx

– ## USW1_MMHA_6400_Week08_ratioExcelTemplate.xlsx

– ## WeekEightAssignment1version2.pdf

– ## WK7Assgn_Campbell_L1.xlsx

**## Week8AssignmentInstructions-HealthcareFinance.docx**

**Week 8 Assignment**

**Healthcare Finance**

**Ratio Analysis**

It is important to understand that when interpreting financial statements, the numbers alone may not provide the whole financial picture of an organization. Instead, you must analyze the statements using ratios, which are then compared to benchmarks across the healthcare industry. For this Assignment, examine the financial health of a community hospital.

**To prepare for this Assignment:**

· Review the Week 8 Assignment 1 document provided to you by the instructor. Examine the financial statements from the community hospital. Reflect on how you will use this financial data to calculate and analyze the organization’s financial ratios.

· Refer to Chapter 13 of
_Gapinski’s Understanding Healthcare Financial Management_.

· Download Week 8 Assignment 1 Ratio Excel Template.

**Submit** the following:

· Using the statement of operations and balance sheet for the community hospital, complete the “Week 8 Ratio Excel Template.”

Refer to the Week 8 Assignment 1 Rubric for specific grading elements and criteria. Your instructor will use this grading rubric to assess your work.

**## Week8LearningResources-HealthcareFinance.docx**

**Week 8 Learning Resources**

**Healthcare Finance**

**Required Readings**

· Pink, G. H., & Song, P. H. (2020).
_Gapinski’s understanding healthcare financial management_(8th ed.). Health Administration Press.

· Chapter 8, “Lease Financing” (pp. 281–313)

· Chapter 9, “Cost of Capital” (pp. 317–358)

· Review: Chapter 13, “Financial Condition Analysis” (pp. 507–548)

· Center for Health Information and Analysis. (n.d.).
[_Interpretation of financial ratiosLinks to an external site._](https://www.chiamass.gov/interpretation-of-financial-ratios/) _._ https://www.chiamass.gov/interpretation-of-financial-ratios/

· Enumah, S. J., Resnick, A. S., & Chang, D. C. (2022).
[Association of measured quality with financial health among U.S. hospitalsLinks to an external site.](https://search.ebscohost.com/login.aspx?direct=true&AuthType=shib&db=a9h&AN=156412950&site=eds-live&scope=site&custid=s6527200).
_PloS One_,
_17_(4), 1–13. https://doi.org/10.1371/journal.pone.0266696

· Stahl, M. J. (2006).
[Breakeven analysisLinks to an external site.](https://go.openathens.net/redirector/waldenu.edu?url=https://sk.sagepub.com/reference/healthcaremanagement/n68.xml). In
_Encyclopedia of Health Care Management_. Sage. https://doi.org/10.4135/9781412950602
[Links to an external site.](https://go.openathens.net/redirector/waldenu.edu?url=https://sk.sagepub.com/reference/healthcaremanagement/n68.xml)

· Stahl, M. J. (2006).
[Ratio analysisLinks to an external site.](https://go.openathens.net/redirector/waldenu.edu?url=https://sk.sagepub.com/reference/healthcaremanagement/n681.xml). In
_Encyclopedia of Health Care Management_. Sage. https://doi.org/10.4135/9781412950602

·
**Document:** [Week 8 Assignment 1 Ratio Excel Template (Excel spreadsheet)](https://waldenu.instructure.com/courses/226605/files/19547069?wrap=1)

**Optional Resources**

· OASIS. (n.d.).
[_Statistics skills in Microsoft ExcelLinks to an external site._](https://academicguides.waldenu.edu/academic-skills-center/microsoft-office/excel) _._ Walden University. https://academicguides.waldenu.edu/academic-skills-center/microsoft-office/excel

**## USW1_MMHA_6400_Week08_ratioExcelTemplate.xlsx**

## Ratio Template

| | | | | | | | | | | | | | |
| — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Week 8 Assignment 1 Ratio Template |

| | | A | | B | | | D | | E | | F | | G |
| (in '000) |
| | | 12/31/22 | | 12/31/23 | | | 2022 | | 2022 | | 2023 | | 2023 |
| Ratio[a] | | [D/E] | | [F/G] | | | Numerator | | Denominator | | Numerator | | Denominator |

| Current Ratio |
| Quick Ratio |
| Acid Test Ratio |
| Days in Accounts Receivable |
| Days Cash on Hand |
| Average Payment Period (Days) |

| Operating Revenue per Adjusted Discharge |
| Operating Expense per Adjusted Discharge |
| Salary & Benefit Exp. as % of Operating Exp. |
| Operating Margin |
| Non-Operating Revenue |
| Return on Total Assets |
| Return on Net Assets |

| Total Asset Turnover Ratio |
| Fixed Asset Turnover Ratio |
| Age of Plant Ratio |

| Long-Term Debt to Net Assets |
| Net Assets to Total Assets |

**## WeekEightAssignment1version2.pdf**

© 2024 Walden University Page 1 of 3

Healthcare Financial Management and Economics

Week 8 Assignment 1 — Hidden Hollow Community

Hospital

Assignment 1: Ratio Analysis

It is important to understand that when interpreting financial statements, the numbers
alone may not provide the whole financial picture of an organization. Instead, you must
analyze the statements using ratios, which are then compared to benchmarks across
the healthcare industry. For this Assignment, you examine the financial documents for
Hidden Hollow Community Hospital and analyze the organization’s financial health.

Hidden Hollow Community Hospital

Hidden Hollow Community Hospital is a small community hospital serving a rural
population. The adjusted discharges are 3.30 for the 1st year and 3.10 for the 2nd.

Hidden Hollow Community Hospital
Statement of Operations (in thousands) for the

Years Ended December 31, 2022 and 2023

2022 2023

Revenues

Net patient service revenue $22,000 $19,000
Net assets released from restriction 1,000 800

Total operating revenues 23,000 19,800

Expenses

Salaries and benefits 11,000 8,000
Supplies and other expenses 7,000 6,000
Depreciation 2,500 2,100
General services 300 520

Total operating expenses 20,800 16,620

Operating income 1,250 4,200

Non-operating income 3,500 2,200

Excess of revenues over expenses 4,750 6,400

Increase (decrease) in net assets $4,750 $6,400

© 2024 Walden University Page 2 of 3

Hidden Hollow Community Hospital
Balance Sheet (in thousands) for the

Years Ended December 31, 2022 and 2023

2022 2023

Current assets

Cash and cash
equivalents

$600 $400

Net patient receivables 4,000 3,500
Inventory 1,000 900

Total current assets 5,600 4,800

Non-current assets

Plant, property, and
equipment

Gross plant, property, and
equipment

25,000 23,000

(less accumulated
depreciation)

(18,000) (17,000)

Net plant, property, and
equipment

7,000 6,000

Board-designated funds 19,000 10,000

Total assets 31,600 20,800

Current liabilities

Accounts payable 2,600 2,100
Accrued expenses 850 900

Total current liabilities 3,450 3,000

Long-term liabilities

Bonds payable 5,600 7,150

Total long-term liabilities 5,600 7,150

Net assets 22,550 10,650

Total liabilities and net
assets

$31,600 $20,800

To prepare for this Assignment:

Examine the financial statements from Hidden Hollow Community Hospital. Reflect
on how you will use this financial data to calculate and analyze the organization’s
financial ratios. Refer to Chapter 13 of Gapinski’s Understanding Healthcare
Financial Management for additional guidance.

© 2024 Walden University Page 3 of 3

The Assignment:

Using the statement of operations and balance sheet for Jackson Community Hospital
,above complete the “Week 8 Assignment 1 Ratio Excel Template”.

Your Assignment is due by Day 7 of Week 8.

**## WK7Assgn_Campbell_L1.xlsx**

## Balance Sheet

| | |
| — | — |

| Balance Sheet (in '000s) |
| For the Year Ended September 30, 2023 |
| | 9/30/23 |
| Current assets |
| Cash and cash equivalents | $20,000 |
| Net accounts receivable | 25,000 |
| Inventory | 1,100 |
| Total current assets | 46,100 |

| Gross plant, property, and equipment | 556,000 |
| (less accumulated depreciation) | 99,000 |
| Net plant, property & equipment | 457,000 |
| Long-term investments | 148,400 |

| Total assets | $651,500 |

| Current liabilities |
| Accounts payable | $18,000 |
| Wages payable | 9,100 |
| Total current liabilities | 27,100 |

| Long-term debt | 189,700 |
| Total liabilities | 216,800 |

| Net assets |
| Ending balance, unrestricted net assets | 426,000 |
| Ending balance, temporarily restricted net assets | 8,700 |
| Total net assets | 434,700 |

| Total liabilities and net assets | $651,500 |

## Profit and Loss Statement

| | |
| — | — |
| Profit and Loss Statement |
| Statement of Operations (in '000s) |
| For the Year Ended September 30, 2023 |
| | 9/30/23 |
| Unrestricted revenues |
| Patient revenues (net of contractuals) | $614,000 |
| Provision for bad debt expense | $5,400 |
| Net patient revenues | $608,600 |
| Net assets released from temporary restriction | 8,000 |
| Total revenues | 616,600 |

| Operating expenses: |
| Labor expense | 145,000 |
| General expense | 95,000 |
| Supply expense | 66,000 |

| Depreciation expense | 10,000 |
| Insurance expense | 70,000 |
| Total operating expenses | 386,000 |

| Excess of revenues over expenses | 230,600 |
| Transfer to parent corporation | (8,000) |

| Increase in unrestricted net assets | $222,600 |

## Cash Flow Statement

| | |
| — | — |
| Cash Flow Statement |
| Statement of Changes in Net Assets (in '000s) |
| For the Year Ended September 30, 2023 |
| | 9/30/23 |
| Unrestricted net assets |
| Excess of revenues over expenses | 230,600 |
| Unrestricted contributions | 0 |
| Transfer to parent corporation | (8,000) |
| Change in unrestricted net assets | 222,600 |

| Temporarily restricted net assets |
| Net assets released from temporary restriction | (8,000) |
| Change in temporarily restricted net assets | (8,000) |

| Permanently restricted net assets |
| | 0 |
| Change in permanently restricted net assets | 0 |

| Increase in net assets | 214,600 |
| Beginning balance, net assets | 220,100 |

| Ending balance, total net assets | $434,700 |

**## WK7Assgn_Campbell_L1.xlsx**

## Balance Sheet

| | |
| — | — |

| Balance Sheet (in '000s) |
| For the Year Ended September 30, 2023 |
| | 9/30/23 |
| Current assets |
| Cash and cash equivalents | $20,000 |
| Net accounts receivable | 25,000 |
| Inventory | 1,100 |
| Total current assets | 46,100 |

| Gross plant, property, and equipment | 556,000 |
| (less accumulated depreciation) | 99,000 |
| Net plant, property & equipment | 457,000 |
| Long-term investments | 148,400 |

| Total assets | $651,500 |

| Current liabilities |
| Accounts payable | $18,000 |
| Wages payable | 9,100 |
| Total current liabilities | 27,100 |

| Long-term debt | 189,700 |
| Total liabilities | 216,800 |

| Net assets |
| Ending balance, unrestricted net assets | 426,000 |
| Ending balance, temporarily restricted net assets | 8,700 |
| Total net assets | 434,700 |

| Total liabilities and net assets | $651,500 |

## Profit and Loss Statement

| | |
| — | — |
| Profit and Loss Statement |
| Statement of Operations (in '000s) |
| For the Year Ended September 30, 2023 |
| | 9/30/23 |
| Unrestricted revenues |
| Patient revenues (net of contractuals) | $614,000 |
| Provision for bad debt expense | $5,400 |
| Net patient revenues | $608,600 |
| Net assets released from temporary restriction | 8,000 |
| Total revenues | 616,600 |

| Operating expenses: |
| Labor expense | 145,000 |
| General expense | 95,000 |
| Supply expense | 66,000 |

| Depreciation expense | 10,000 |
| Insurance expense | 70,000 |
| Total operating expenses | 386,000 |

| Excess of revenues over expenses | 230,600 |
| Transfer to parent corporation | (8,000) |

| Increase in unrestricted net assets | $222,600 |

## Cash Flow Statement

| | |
| — | — |
| Cash Flow Statement |
| Statement of Changes in Net Assets (in '000s) |
| For the Year Ended September 30, 2023 |
| | 9/30/23 |
| Unrestricted net assets |
| Excess of revenues over expenses | 230,600 |
| Unrestricted contributions | 0 |
| Transfer to parent corporation | (8,000) |
| Change in unrestricted net assets | 222,600 |

| Temporarily restricted net assets |
| Net assets released from temporary restriction | (8,000) |
| Change in temporarily restricted net assets | (8,000) |

| Permanently restricted net assets |
| | 0 |
| Change in permanently restricted net assets | 0 |

| Increase in net assets | 214,600 |
| Beginning balance, net assets | 220,100 |

| Ending balance, total net assets | $434,700 |

**## Week8AssignmentInstructions-HealthcareFinance.docx**

**Week 8 Assignment**

**Healthcare Finance**

**Ratio Analysis**

It is important to understand that when interpreting financial statements, the numbers alone may not provide the whole financial picture of an organization. Instead, you must analyze the statements using ratios, which are then compared to benchmarks across the healthcare industry. For this Assignment, examine the financial health of a community hospital.

**To prepare for this Assignment:**

· Review the Week 8 Assignment 1 document provided to you by the instructor. Examine the financial statements from the community hospital. Reflect on how you will use this financial data to calculate and analyze the organization’s financial ratios.

· Refer to Chapter 13 of
_Gapinski’s Understanding Healthcare Financial Management_.

· Download Week 8 Assignment 1 Ratio Excel Template.

**Submit** the following:

· Using the statement of operations and balance sheet for the community hospital, complete the “Week 8 Ratio Excel Template.”

Refer to the Week 8 Assignment 1 Rubric for specific grading elements and criteria. Your instructor will use this grading rubric to assess your work.

**## Week8LearningResources-HealthcareFinance.docx**

**Week 8 Learning Resources**

**Healthcare Finance**

**Required Readings**

· Pink, G. H., & Song, P. H. (2020).
_Gapinski’s understanding healthcare financial management_(8th ed.). Health Administration Press.

· Chapter 8, “Lease Financing” (pp. 281–313)

· Chapter 9, “Cost of Capital” (pp. 317–358)

· Review: Chapter 13, “Financial Condition Analysis” (pp. 507–548)

· Center for Health Information and Analysis. (n.d.).
[_Interpretation of financial ratiosLinks to an external site._](https://www.chiamass.gov/interpretation-of-financial-ratios/) _._ https://www.chiamass.gov/interpretation-of-financial-ratios/

· Enumah, S. J., Resnick, A. S., & Chang, D. C. (2022).
[Association of measured quality with financial health among U.S. hospitalsLinks to an external site.](https://search.ebscohost.com/login.aspx?direct=true&AuthType=shib&db=a9h&AN=156412950&site=eds-live&scope=site&custid=s6527200).
_PloS One_,
_17_(4), 1–13. https://doi.org/10.1371/journal.pone.0266696

· Stahl, M. J. (2006).
[Breakeven analysisLinks to an external site.](https://go.openathens.net/redirector/waldenu.edu?url=https://sk.sagepub.com/reference/healthcaremanagement/n68.xml). In
_Encyclopedia of Health Care Management_. Sage. https://doi.org/10.4135/9781412950602
[Links to an external site.](https://go.openathens.net/redirector/waldenu.edu?url=https://sk.sagepub.com/reference/healthcaremanagement/n68.xml)

· Stahl, M. J. (2006).
[Ratio analysisLinks to an external site.](https://go.openathens.net/redirector/waldenu.edu?url=https://sk.sagepub.com/reference/healthcaremanagement/n681.xml). In
_Encyclopedia of Health Care Management_. Sage. https://doi.org/10.4135/9781412950602

·
**Document:** [Week 8 Assignment 1 Ratio Excel Template (Excel spreadsheet)](https://waldenu.instructure.com/courses/226605/files/19547069?wrap=1)

**Optional Resources**

· OASIS. (n.d.).
[_Statistics skills in Microsoft ExcelLinks to an external site._](https://academicguides.waldenu.edu/academic-skills-center/microsoft-office/excel) _._ Walden University. https://academicguides.waldenu.edu/academic-skills-center/microsoft-office/excel

**## USW1_MMHA_6400_Week08_ratioExcelTemplate.xlsx**

## Ratio Template

| | | | | | | | | | | | | | |
| — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Week 8 Assignment 1 Ratio Template |

| | | A | | B | | | D | | E | | F | | G |
| (in '000) |
| | | 12/31/22 | | 12/31/23 | | | 2022 | | 2022 | | 2023 | | 2023 |
| Ratio[a] | | [D/E] | | [F/G] | | | Numerator | | Denominator | | Numerator | | Denominator |

| Current Ratio |
| Quick Ratio |
| Acid Test Ratio |
| Days in Accounts Receivable |
| Days Cash on Hand |
| Average Payment Period (Days) |

| Operating Revenue per Adjusted Discharge |
| Operating Expense per Adjusted Discharge |
| Salary & Benefit Exp. as % of Operating Exp. |
| Operating Margin |
| Non-Operating Revenue |
| Return on Total Assets |
| Return on Net Assets |

| Total Asset Turnover Ratio |
| Fixed Asset Turnover Ratio |
| Age of Plant Ratio |

| Long-Term Debt to Net Assets |
| Net Assets to Total Assets |

**## WeekEightAssignment1version2.pdf**

© 2024 Walden University Page 1 of 3

Healthcare Financial Management and Economics

Week 8 Assignment 1 — Hidden Hollow Community

Hospital

Assignment 1: Ratio Analysis

It is important to understand that when interpreting financial statements, the numbers
alone may not provide the whole financial picture of an organization. Instead, you must
analyze the statements using ratios, which are then compared to benchmarks across
the healthcare industry. For this Assignment, you examine the financial documents for
Hidden Hollow Community Hospital and analyze the organization’s financial health.

Hidden Hollow Community Hospital

Hidden Hollow Community Hospital is a small community hospital serving a rural
population. The adjusted discharges are 3.30 for the 1st year and 3.10 for the 2nd.

Hidden Hollow Community Hospital
Statement of Operations (in thousands) for the

Years Ended December 31, 2022 and 2023

2022 2023

Revenues

Net patient service revenue $22,000 $19,000
Net assets released from restriction 1,000 800

Total operating revenues 23,000 19,800

Expenses

Salaries and benefits 11,000 8,000
Supplies and other expenses 7,000 6,000
Depreciation 2,500 2,100
General services 300 520

Total operating expenses 20,800 16,620

Operating income 1,250 4,200

Non-operating income 3,500 2,200

Excess of revenues over expenses 4,750 6,400

Increase (decrease) in net assets $4,750 $6,400

© 2024 Walden University Page 2 of 3

Hidden Hollow Community Hospital
Balance Sheet (in thousands) for the

Years Ended December 31, 2022 and 2023

2022 2023

Current assets

Cash and cash
equivalents

$600 $400

Net patient receivables 4,000 3,500
Inventory 1,000 900

Total current assets 5,600 4,800

Non-current assets

Plant, property, and
equipment

Gross plant, property, and
equipment

25,000 23,000

(less accumulated
depreciation)

(18,000) (17,000)

Net plant, property, and
equipment

7,000 6,000

Board-designated funds 19,000 10,000

Total assets 31,600 20,800

Current liabilities

Accounts payable 2,600 2,100
Accrued expenses 850 900

Total current liabilities 3,450 3,000

Long-term liabilities

Bonds payable 5,600 7,150

Total long-term liabilities 5,600 7,150

Net assets 22,550 10,650

Total liabilities and net
assets

$31,600 $20,800

To prepare for this Assignment:

Examine the financial statements from Hidden Hollow Community Hospital. Reflect
on how you will use this financial data to calculate and analyze the organization’s
financial ratios. Refer to Chapter 13 of Gapinski’s Understanding Healthcare
Financial Management for additional guidance.

© 2024 Walden University Page 3 of 3

The Assignment:

Using the statement of operations and balance sheet for Jackson Community Hospital
,above complete the “Week 8 Assignment 1 Ratio Excel Template”.

Your Assignment is due by Day 7 of Week 8.

**## WK7Assgn_Campbell_L1.xlsx**

## Balance Sheet

| | |
| — | — |

| Balance Sheet (in '000s) |
| For the Year Ended September 30, 2023 |
| | 9/30/23 |
| Current assets |
| Cash and cash equivalents | $20,000 |
| Net accounts receivable | 25,000 |
| Inventory | 1,100 |
| Total current assets | 46,100 |

| Gross plant, property, and equipment | 556,000 |
| (less accumulated depreciation) | 99,000 |
| Net plant, property & equipment | 457,000 |
| Long-term investments | 148,400 |

| Total assets | $651,500 |

| Current liabilities |
| Accounts payable | $18,000 |
| Wages payable | 9,100 |
| Total current liabilities | 27,100 |

| Long-term debt | 189,700 |
| Total liabilities | 216,800 |

| Net assets |
| Ending balance, unrestricted net assets | 426,000 |
| Ending balance, temporarily restricted net assets | 8,700 |
| Total net assets | 434,700 |

| Total liabilities and net assets | $651,500 |

## Profit and Loss Statement

| | |
| — | — |
| Profit and Loss Statement |
| Statement of Operations (in '000s) |
| For the Year Ended September 30, 2023 |
| | 9/30/23 |
| Unrestricted revenues |
| Patient revenues (net of contractuals) | $614,000 |
| Provision for bad debt expense | $5,400 |
| Net patient revenues | $608,600 |
| Net assets released from temporary restriction | 8,000 |
| Total revenues | 616,600 |

| Operating expenses: |
| Labor expense | 145,000 |
| General expense | 95,000 |
| Supply expense | 66,000 |

| Depreciation expense | 10,000 |
| Insurance expense | 70,000 |
| Total operating expenses | 386,000 |

| Excess of revenues over expenses | 230,600 |
| Transfer to parent corporation | (8,000) |

| Increase in unrestricted net assets | $222,600 |

## Cash Flow Statement

| | |
| — | — |
| Cash Flow Statement |
| Statement of Changes in Net Assets (in '000s) |
| For the Year Ended September 30, 2023 |
| | 9/30/23 |
| Unrestricted net assets |
| Excess of revenues over expenses | 230,600 |
| Unrestricted contributions | 0 |
| Transfer to parent corporation | (8,000) |
| Change in unrestricted net assets | 222,600 |

| Temporarily restricted net assets |
| Net assets released from temporary restriction | (8,000) |
| Change in temporarily restricted net assets | (8,000) |

| Permanently restricted net assets |
| | 0 |
| Change in permanently restricted net assets | 0 |

| Increase in net assets | 214,600 |
| Beginning balance, net assets | 220,100 |

| Ending balance, total net assets | $434,700 |

**## Week8AssignmentInstructions-HealthcareFinance.docx**

**Week 8 Assignment**

**Healthcare Finance**

**Ratio Analysis**

It is important to understand that when interpreting financial statements, the numbers alone may not provide the whole financial picture of an organization. Instead, you must analyze the statements using ratios, which are then compared to benchmarks across the healthcare industry. For this Assignment, examine the financial health of a community hospital.

**To prepare for this Assignment:**

· Review the Week 8 Assignment 1 document provided to you by the instructor. Examine the financial statements from the community hospital. Reflect on how you will use this financial data to calculate and analyze the organization’s financial ratios.

· Refer to Chapter 13 of
_Gapinski’s Understanding Healthcare Financial Management_.

· Download Week 8 Assignment 1 Ratio Excel Template.

**Submit** the following:

· Using the statement of operations and balance sheet for the community hospital, complete the “Week 8 Ratio Excel Template.”

Refer to the Week 8 Assignment 1 Rubric for specific grading elements and criteria. Your instructor will use this grading rubric to assess your work.

**## Week8LearningResources-HealthcareFinance.docx**

**Week 8 Learning Resources**

**Healthcare Finance**

**Required Readings**

· Pink, G. H., & Song, P. H. (2020).
_Gapinski’s understanding healthcare financial management_(8th ed.). Health Administration Press.

· Chapter 8, “Lease Financing” (pp. 281–313)

· Chapter 9, “Cost of Capital” (pp. 317–358)

· Review: Chapter 13, “Financial Condition Analysis” (pp. 507–548)

· Center for Health Information and Analysis. (n.d.).
[_Interpretation of financial ratiosLinks to an external site._](https://www.chiamass.gov/interpretation-of-financial-ratios/) _._ https://www.chiamass.gov/interpretation-of-financial-ratios/

· Enumah, S. J., Resnick, A. S., & Chang, D. C. (2022).
[Association of measured quality with financial health among U.S. hospitalsLinks to an external site.](https://search.ebscohost.com/login.aspx?direct=true&AuthType=shib&db=a9h&AN=156412950&site=eds-live&scope=site&custid=s6527200).
_PloS One_,
_17_(4), 1–13. https://doi.org/10.1371/journal.pone.0266696

· Stahl, M. J. (2006).
[Breakeven analysisLinks to an external site.](https://go.openathens.net/redirector/waldenu.edu?url=https://sk.sagepub.com/reference/healthcaremanagement/n68.xml). In
_Encyclopedia of Health Care Management_. Sage. https://doi.org/10.4135/9781412950602
[Links to an external site.](https://go.openathens.net/redirector/waldenu.edu?url=https://sk.sagepub.com/reference/healthcaremanagement/n68.xml)

· Stahl, M. J. (2006).
[Ratio analysisLinks to an external site.](https://go.openathens.net/redirector/waldenu.edu?url=https://sk.sagepub.com/reference/healthcaremanagement/n681.xml). In
_Encyclopedia of Health Care Management_. Sage. https://doi.org/10.4135/9781412950602

·
**Document:** [Week 8 Assignment 1 Ratio Excel Template (Excel spreadsheet)](https://waldenu.instructure.com/courses/226605/files/19547069?wrap=1)

**Optional Resources**

· OASIS. (n.d.).
[_Statistics skills in Microsoft ExcelLinks to an external site._](https://academicguides.waldenu.edu/academic-skills-center/microsoft-office/excel) _._ Walden University. https://academicguides.waldenu.edu/academic-skills-center/microsoft-office/excel

**## USW1_MMHA_6400_Week08_ratioExcelTemplate.xlsx**

## Ratio Template

| | | | | | | | | | | | | | |
| — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Week 8 Assignment 1 Ratio Template |

| | | A | | B | | | D | | E | | F | | G |
| (in '000) |
| | | 12/31/22 | | 12/31/23 | | | 2022 | | 2022 | | 2023 | | 2023 |
| Ratio[a] | | [D/E] | | [F/G] | | | Numerator | | Denominator | | Numerator | | Denominator |

| Current Ratio |
| Quick Ratio |
| Acid Test Ratio |
| Days in Accounts Receivable |
| Days Cash on Hand |
| Average Payment Period (Days) |

| Operating Revenue per Adjusted Discharge |
| Operating Expense per Adjusted Discharge |
| Salary & Benefit Exp. as % of Operating Exp. |
| Operating Margin |
| Non-Operating Revenue |
| Return on Total Assets |
| Return on Net Assets |

| Total Asset Turnover Ratio |
| Fixed Asset Turnover Ratio |
| Age of Plant Ratio |

| Long-Term Debt to Net Assets |
| Net Assets to Total Assets |

**## WeekEightAssignment1version2.pdf**

© 2024 Walden University Page 1 of 3

Healthcare Financial Management and Economics

Week 8 Assignment 1 — Hidden Hollow Community

Hospital

Assignment 1: Ratio Analysis

It is important to understand that when interpreting financial statements, the numbers
alone may not provide the whole financial picture of an organization. Instead, you must
analyze the statements using ratios, which are then compared to benchmarks across
the healthcare industry. For this Assignment, you examine the financial documents for
Hidden Hollow Community Hospital and analyze the organization’s financial health.

Hidden Hollow Community Hospital

Hidden Hollow Community Hospital is a small community hospital serving a rural
population. The adjusted discharges are 3.30 for the 1st year and 3.10 for the 2nd.

Hidden Hollow Community Hospital
Statement of Operations (in thousands) for the

Years Ended December 31, 2022 and 2023

2022 2023

Revenues

Net patient service revenue $22,000 $19,000
Net assets released from restriction 1,000 800

Total operating revenues 23,000 19,800

Expenses

Salaries and benefits 11,000 8,000
Supplies and other expenses 7,000 6,000
Depreciation 2,500 2,100
General services 300 520

Total operating expenses 20,800 16,620

Operating income 1,250 4,200

Non-operating income 3,500 2,200

Excess of revenues over expenses 4,750 6,400

Increase (decrease) in net assets $4,750 $6,400

© 2024 Walden University Page 2 of 3

Hidden Hollow Community Hospital
Balance Sheet (in thousands) for the

Years Ended December 31, 2022 and 2023

2022 2023

Current assets

Cash and cash
equivalents

$600 $400

Net patient receivables 4,000 3,500
Inventory 1,000 900

Total current assets 5,600 4,800

Non-current assets

Plant, property, and
equipment

Gross plant, property, and
equipment

25,000 23,000

(less accumulated
depreciation)

(18,000) (17,000)

Net plant, property, and
equipment

7,000 6,000

Board-designated funds 19,000 10,000

Total assets 31,600 20,800

Current liabilities

Accounts payable 2,600 2,100
Accrued expenses 850 900

Total current liabilities 3,450 3,000

Long-term liabilities

Bonds payable 5,600 7,150

Total long-term liabilities 5,600 7,150

Net assets 22,550 10,650

Total liabilities and net
assets

$31,600 $20,800

To prepare for this Assignment:

Examine the financial statements from Hidden Hollow Community Hospital. Reflect
on how you will use this financial data to calculate and analyze the organization’s
financial ratios. Refer to Chapter 13 of Gapinski’s Understanding Healthcare
Financial Management for additional guidance.

© 2024 Walden University Page 3 of 3

The Assignment:

Using the statement of operations and balance sheet for Jackson Community Hospital
,above complete the “Week 8 Assignment 1 Ratio Excel Template”.

Your Assignment is due by Day 7 of Week 8.

**## WK7Assgn_Campbell_L1.xlsx**

## Balance Sheet

| | |
| — | — |

| Balance Sheet (in '000s) |
| For the Year Ended September 30, 2023 |
| | 9/30/23 |
| Current assets |
| Cash and cash equivalents | $20,000 |
| Net accounts receivable | 25,000 |
| Inventory | 1,100 |
| Total current assets | 46,100 |

| Gross plant, property, and equipment | 556,000 |
| (less accumulated depreciation) | 99,000 |
| Net plant, property & equipment | 457,000 |
| Long-term investments | 148,400 |

| Total assets | $651,500 |

| Current liabilities |
| Accounts payable | $18,000 |
| Wages payable | 9,100 |
| Total current liabilities | 27,100 |

| Long-term debt | 189,700 |
| Total liabilities | 216,800 |

| Net assets |
| Ending balance, unrestricted net assets | 426,000 |
| Ending balance, temporarily restricted net assets | 8,700 |
| Total net assets | 434,700 |

| Total liabilities and net assets | $651,500 |

## Profit and Loss Statement

| | |
| — | — |
| Profit and Loss Statement |
| Statement of Operations (in '000s) |
| For the Year Ended September 30, 2023 |
| | 9/30/23 |
| Unrestricted revenues |
| Patient revenues (net of contractuals) | $614,000 |
| Provision for bad debt expense | $5,400 |
| Net patient revenues | $608,600 |
| Net assets released from temporary restriction | 8,000 |
| Total revenues | 616,600 |

| Operating expenses: |
| Labor expense | 145,000 |
| General expense | 95,000 |
| Supply expense | 66,000 |

| Depreciation expense | 10,000 |
| Insurance expense | 70,000 |
| Total operating expenses | 386,000 |

| Excess of revenues over expenses | 230,600 |
| Transfer to parent corporation | (8,000) |

| Increase in unrestricted net assets | $222,600 |

## Cash Flow Statement

| | |
| — | — |
| Cash Flow Statement |
| Statement of Changes in Net Assets (in '000s) |
| For the Year Ended September 30, 2023 |
| | 9/30/23 |
| Unrestricted net assets |
| Excess of revenues over expenses | 230,600 |
| Unrestricted contributions | 0 |
| Transfer to parent corporation | (8,000) |
| Change in unrestricted net assets | 222,600 |

| Temporarily restricted net assets |
| Net assets released from temporary restriction | (8,000) |
| Change in temporarily restricted net assets | (8,000) |

| Permanently restricted net assets |
| | 0 |
| Change in permanently restricted net assets | 0 |

| Increase in net assets | 214,600 |
| Beginning balance, net assets | 220,100 |

| Ending balance, total net assets | $434,700 |