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Running head: ACTIVITY RATIOS 1

ACTIVITY RATIOS 2

Activity Ratios

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Activity Ratios for Columbus Regional Hospital

Columbus Regional Hospital is one of the established healthcare facilities in Indiana State. Since its establishment, the hospital has been committed to the delivery of high quality, efficient and satisfactory healthcare services to all its clients. However, to provide world-class services, the facility has had to heavily invest in and properly manage its human and non-human resources. This justifies why he hospital has managed to survive for quite a long time. When it comes to financial management, the hospital’s management has demonstrated a commitment in usage. The records from the hospital’s activity ratios prove that the Columbus Regional Hospital is progressive.

One of the most important indicators in the determination of the hospital’s progress is the asset turnover ratio. This is an activity ratio derived by comparing the company’s net sales to its total assets. From its financial statements, Columbus Regional Hospital has had an impressive result. The total assets for the 2011 and 2012 fiscal years stood at $ 345,782,576 and

$331,609,111 respectively against a total revenue of $195.4 million in 2011 and $232.9 million from $195.4 in 2012. This is a clear proof that the hospital is performing well. The management has been efficiently utilizing the allocated resources to help in improving the hospital’s revenue.

The other important activity ratio used in measuring the performance of Columbus Regional Hospital is fixed asset turnover ratio. As its name suggests, fixed asset ratio simply compares net sales to the fixed assets. During the 2011 and 2012 financial periods, Columbus Regional Hospital had a fixed assets were valued at $130,958,392 in 2011 and $ 130,538,382 in 2012. On the other hand, the hospital garnered total revenue of $195,403,003 in 2011 and

$ 233,046,391 in 2012. This is clear evidence that the hospital is efficient in the use of its resources. It is for this reason that the facility increased the number of its patients from 241,774 in 2011 to 246,130 in 2012. This was a 19.2% increment in the number of admissions. It represented an increase in revenues from the Medicare, Medicaid, managed care plans and other programs.

Last, but not least, the performance of Columbus Regional Hospital can be done using the age of plant ration. Age of plant ratio is a type of ratio that is used in the measurement of the age of a healthcare facility’s equipments by assessing the rate of depreciation of the said equipments. A thorough analysis of Columbus Regional Hospital shows that the facility is ahead of its plant age benchmark. An evaluation of the physical and technological threatening depreciation rate in the company because the life expectancy shows that there is no depreciation of the equipments. Meaning, the hospital has heavily invested in the equipments. However, to be on the safer side, the management of the hospital should still consider making additional investments in modern and developed facilities.