Financial Ratio Analysis

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Financial ratios help stakeholders and potential investors to determine the sustainability and potential
profitability of an organization. Performing a ratio analysis on the financial statements provides

stakeholders and investors with insight of how the organization has performed. The ratios are an indicator

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as to the financial health of the organization. Healthcare providers should track the operating margin,

operating EBIDA margin,
days cash on hand, debt to capitalization, and capital spending ratios (Becker’s Hospital Review, 2012).

Why are these ratios important to the healthcare industry?
READ:
· Overview
· Bai, G., & Anderson, G.F. (2016). A more detailed understanding of factors associated with hospital
profitability. Health Affairs, 35(5), 889-897.

https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2015.1193
● Kaufman, B.G., Thomas, S.R., Randolph, R.K., Perry, J.R., Thompson, K.W., Holmes, G.M., & Pink, G.H.
(2016). The rising rate of rural hospital closures. The Journal of Rural Health, 32(1), 35-43.
https://www.researchgate.net/publication/280125172_The_Rising_Rate_of_Rural_Hospital_Closures

Sample Solution

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