HW

Running head: ACTIVITY RATIOS 1

ACTIVITY RATIOS 2

Activity Ratios for Columbus Regional Hospital

Activity Ratios are financial tools that show the ability of an organization to convert its assets into cash. However, The records from the hospital’s activity ratios prove that the Columbus Regional Hospital is progressive. We shall compare its financial records with the records of the Ascension healthcare hospital which is one of their competitors.

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 2015 and 2014 fiscal years stood at $ 415,448,377 and $416,238,159 respectively which was a decrease as compared to $30,844,890 for Ascension healthcare. This is to show they are doing far much better than their competition. The total revenues of $345.3 million for the year 2015, which was also a 0.6% decrease from a total of $347.2 million in 2014. Compared to ascension healthcare, it was $198.5 million which is lower than that of Columbus regional hospital. This is a clear proof that the hospital lost some patients in the year 2015.

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 2014 and 2015 financial periods, Columbus Regional Hospital had a fixed assets were valued at $135,487,263 in 2015 and $121,942,347 in 2014. On the other hand, the hospital garnered total revenue total revenues of $345.3 million for the year 2015, and a total of $347.2 million in 2014 as compared to $198.5 million for Ascension Company. 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 238,553 in 2014 to 248,196 in 2015. This was a 4.042% increment in the number of admissions. It however did not mean that the total revenue would increase. However, there was a decrease in the revenue even though the patients’ admission increased and this indicates a slight decrease 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 ratio. Age of plant ratio is a type of ratio that is used in the measurement of the age of a healthcare facility’s equipment by assessing the rate of depreciation of the said equipment. 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 equipment. Meaning, the hospital has heavily invested in the equipment. However, to be on the safer side, the management of the hospital should still consider making additional investments in modern and developed facilities.

References

http://www.in.gov/isdh/files/2016%20Ascension%20Health%20AFS.pdf

https://www.in.gov/isdh/files/2015_Columbus_Regional_Hospital_AFS.pdf