(Financial statement analysis of a governmental enterprise hospital)
Following is a trial balance (with 000 omitted for simplification) showing the accounts of Beta Hospital at December 31, 2013. Using the information from the trial balance, analyze Beta's financial statements by answering the following questions. Show all calculations.
a. What is the current ratio?
b. What is the number of days of revenue in net patient accounts receivable?
c. How much is the excess of revenues over expenses?
d. What is the earnings margin?
e. What is the long-term debt-to-equity ratio at year-end?
f. What is the interest coverage (times interest earned)?
Debits Credits
Cash $5,000
Patient accounts receivable 8,000
Allowance for bad debts $1,000
Food and medicines inventory 2,000
Buildings. 40,000
Accumulated depreciation, buildings 8,000
Equipment 20,000
Accumulated depreciation, equipment 10,000
Land 5,000
Accounts payable 6,000
Accrued interest payable 200
Current portion of bonds payable 1,500
Long-term bonds payable 34,000
Net assets, January 1, 2008 17,300
Patient service revenues (net) 36,000
Patient care expense 20,000
Dietary expense 2,000
General and administrative expense 6,000
Bad debts expense 1,000
Depreciation., buildings and equipment 4,000
Interest expense 1,000 _______
Totals $114,000 $114,000
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