15 Aug The CFO has provided you with a copy of the organizations financial statements. Instructions for the assignment are listed below:? This information will be critical in evaluating the organizations fi
The CFO has provided you with a copy of the organization’s financial statements. (see the attached)
Instructions for the assignment are listed below:
This information will be critical in evaluating the organization’s financial capacity to support the proposed expansion of services into the rural areas of the state.
You are asked to review these financial statements (which include the Income Statement, Statement of Cash Flows, and the Balance Sheet) and prepare an executive summary outlining the financial strength of the organization and evidence to support the expansion. Your executive summary should include the following:
- An overview of the issue.
- A review of critical financial ratios (Liquidity, Solvency, Profitability, and Efficiency) based on financial statements.
- Inferences of forecasts, estimates, interpretations, and conclusions based on the key ratios.
- Provide a recommendation based on ration analysis.
Please see the rubric below:
A – 4 – Mastery
Comprehensive identification of summary of the issue. Includes multiple examples or supporting details.
A – 4 – Mastery
Clear and thorough review of critical financial ratios–Liquidity, Solvency, Profitability, and Efficiency–based on financial statements. Includes multiple examples or supporting details per topic
6
A – 4 – Mastery
Clear and thorough inferences of forecasts, estimates, interpretations, and conclusions based on the key ratios. Includes multiple examples or supporting details per topic.
A – 4 – Mastery
Comprehensive recommendation, based on ration analysis. Includes multiple examples or supporting details.
1
6Metropolitan Memorial Hospital
(Balance Sheet)
(in thousands)
2018 2017
|
Current Assets |
||
|
Cash |
$124 |
$280 |
|
Temporary Investments |
45 |
30 |
|
Receivables, Net |
$1,536 |
$1,340 |
|
Inventory |
175 |
140 |
|
Prepaid Expenses |
32 |
40 |
|
Total Current Assets |
||
|
Long-term Investments |
1,010 |
600 |
|
Plant and Equipment |
6,980 |
6,580 |
|
Less accumulated depreciation |
(1,730) |
(1,660) |
|
Plant and Equipment, net |
5,250 |
4,920 |
|
Total Assets |
$8,172 |
$7,350 |
|
Current Liabilities |
||
|
Accounts Payable |
$302 |
$370 |
|
Accrued Expense Payable |
208 |
220 |
|
Deferred Revenues |
77 |
60 |
|
Total Current Liabilities |
587 |
650 |
|
Long-term liabilities |
3,000 |
2,400 |
|
Total Liabilities |
3,587 |
3,050 |
|
Net Assets |
||
|
Unrestricted |
3,285 |
3,000 |
|
Temporarily Restricted |
700 |
700 |
|
Permanently Restricted |
600 |
600 |
|
Total net assets |
4,585 |
4,300 |
|
Total liabilities and net assets |
$8,172 |
$7,350 |
Metropolitan Memorial Hospital Statement of Operations
(Income Statement)
2018 2017
|
Gross patient services revenue (non-GAAP*) |
$9,490 |
$8,870 |
|
Less deductions from revenues (non-GAAP) |
(890) |
(780) |
|
Net patient services revenues |
8,600 |
8,090 |
|
Other operating revenues |
633 |
519 |
|
Total operating revenues |
9,233 |
8,609 |
|
Operating expenses |
||
|
Salaries and wages |
5,678 |
5,497 |
|
Supplies |
850 |
823 |
|
Utilities |
576 |
558 |
|
Insurance |
46 |
44 |
|
Depreciation |
173 |
168 |
|
Interest |
146 |
142 |
|
Bad Debts |
375 |
363 |
|
Other operating expenses |
1,299 |
987 |
|
Total operating expenses |
9,143 |
8,582 |
|
Operating Income |
90 |
27 |
|
Nonoperating Income |
195 |
154 |
|
Excess of revenues over expenses |
$285 |
$181 |
|
Changes in net assets |
||
|
Unrestricted |
$285 |
$181 |
|
Temporarily restricted |
– |
– |
|
Permanently restricted |
– |
– |
|
Total changes in net assets |
285 |
181 |
*GAAP = generally accepted accounting principles
Metropolitan Memorial Hospital
(Statement of Cash Flows)
|
Cash Flows from Operating Activities |
||
|
Cash received from patient and third-party payers |
$8,404 |
|
|
Cash received from other operating revenue sources |
650 |
|
|
Cash received from nonoperating revenue sources |
180 |
|
|
Cash payments to employees |
(4,500) |
|
|
Cash payments to suppliers of goods and services |
(4203) |
|
|
Net cash flow from operating activities |
$ 531 |
|
|
Cash Flows from Investing Activities |
||
|
Cash payments for the purchase of plant assets |
(940) |
|
|
Cash payments for purchase of long-term investments |
(450) |
|
|
Proceeds from sales of plant assets |
54 |
|
|
Proceeds from sale of long-term investments |
49 |
|
|
Net cash flow from investing activities |
(1,287) |
|
|
Cash Flows from Financing Activities |
||
|
Proceeds from Issuance of 6% bonds payable |
3,000 |
|
|
Principal payments on long-term debt |
(400) |
|
|
Cash payments to retire 7% bonds payable |
(2,000) |
|
|
Net cash flow from financing activities |
600 |
|
|
Net increase / (decrease) in cash |
$(156) |
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