Assignment: Application: Basic Financial Calculations

Before you learned algebra, you first had to learn basic addition, subtraction, multiplication, and division. Similarly, before you can fully understand the finances of a health care organization, you first need to be able to apply basic financial calculations used in almost all domains of accounting. A firm grasp of these accounting concepts will better enable you to confidently make budgetary and resource decisions. In this Assignment, you complete calculations that will familiarize you with some of the necessary basic accounting concepts.

Based on the information and financial statements below, calculate the following financial ratios in an Excel Spreadsheet:

= Total Current Assets / Total Current Liabilities

= Cash / (Total Operating Expense / 365 days)

= Accounts Receivable / (Net Patient Service Revenue / 365)

= Accumulated Depreciation / Depreciation Expense

= [Long Term] Debt / Net Assets

= [Long Term] Debt / Total Assets

= Net Patient Service Revenue / Gross Patient Service Revenue

= Gain or (Loss) from Operations / Net Patient Service Revenue

Note: For those Assignments in this course that require you to perform calculations you must:
Use the ‘Week 3 Application Assignment Template’ from your Learning Resources
Show all your calculations and formulas in the spreadsheet

A title and reference page are NOT needed in this assignment. Put your name and assignment at the top of the Excel spreadsheet.

For those not comfortable with the use of Microsoft Excel, this week’s Optional Resources suggest several tutorials.

To prepare:

Spreadsheet attached

Baker, J. J., Baker, R. W., & Dworkin, N. R.  (2018). Health care finance: Basic  tools for nonfinancial managers (5th ed.). Burlington, MA: Jones and  Bartlett Learning.
Chapter 4, “Assets, Liabilities, and Net Worth” (pp. 33-36)
In this chapter, you are introduced to the meaning of assets, liabilities, and net worth. You explore the relationship between the three and how they must be balanced if an organization is to be successful.
Chapter 6, “Expenses (Outflows)” (pp. 47-54)
The focus of this chapter is expenses and how they differ from costs. It highlights how costs should be reported and how expenses can be grouped for more effective planning and control.
Chapter 9, “Understanding Inventory and Depreciation Concepts” (pp. 81-93)
This chapter examines the relationship between inventory and the cost of goods. It demonstrates how to calculate inventory turnover and product depreciation.
Chapter 11, “Reporting as a Tool” (pp. 119-125)
This chapter describes the basic financial reports and how they are used in financial decision making. The four key financial statements are the balance sheet, the statement of revenue, and expense, the statement of fund balance or net worth, and the statement of cash flows. 

Zelman, W., McCue, M., & Glick, N. (2009). Financial management of health care organizations: An introduction to fundamental tools, concepts, and applications (3rd ed.). Hoboken, NJ: Jossey-Bass.
Retrieved from the Walden Library databases.
Chapter 2, “Health Care Financial Statements” (pp. 25–86)
This chapter describes the shared four basic financial statements of all organizations. The authors relate the basics to business-oriented and non-for-profit health organizations.
Chapter 3, “Principles and Practices of Health Care Accounting” (pp. 87–120)
This chapter explores the accounting practices and principles of health care. The authors detail the rules for recording transactions and the process of recording and developing financial statements.
Chapter 4, “Financial Statement Analysis” (pp. 121–186)
This chapter goes into detail about the three types of analysis used in financial statements of health care organizations: horizontal analysis, vertical (common-size) analysis, and ratio analysis. This chapter also explains the categories of ratios and how to apply them.

Week 3 assignment

Name: Course:
Current Ratio = total current assets/ total current liabilities 2.27 Note: in B cell calculation is included
Days of Cash on Hand = cash/(total operating expense/365)
Age of Accounts Receivable = accounts receivable, less allowance for doubtful accounts/(net patient service revenue/365)
Age of Physical Plant = accumulated depreciation/depreciation You will receive a negative number..change to a positive number (Erase information in this cell and put positive number here.
Debt to Equity Ratio = Long Term Debt/Balance at June 30, 20×2-Total net assets
Debt to Assets Ratio = Long TermDebt/total assets
Collection Rate = net patient service revenue/gross patient service revenue
Operating Margin Ratio = gains or loss from operations/net patient service revenue
ABC General Hospital Statement of Revenue and Expenses – June 30, 20X2
Assets
Current Assets
Cash $1,985,000
Accounts Receivable less allowance for doubtful accounts 3,720,000
Inventory 550,000
Total Current Assets $6,255,000
Fixed Assets
Plant and Equipment $10,000,000
Less Accumulated Depreciation -3,770,000
Total Fixed Assets $6,230,000
Total Assets $12,485,000
Liabilities and Net Assets
Current Liabilities
Accounts Payable $1,900,000
Accrued Accounts Payable 850,000
Total Current Liabilities $2,750,000
Long Term Debt 2,800,000
Pension Liability 1,250,000
Total Liabilities 6,800,000
Net Assets
Balance at June 30, 20X1 4,775,000
Gain or (Loss) from Operations 910,000
Balance at June 30, 20X2 – Net Assets $5,685,000
Total Liabilities and Net Assets $12,485,000
Gross Patient Service Revenue
Inpatient Revenue $8,250,000
Outpatient Revenue 2,275,000
Total Gross Patient Se