(FINAL ANSWER) HMGT 322 Week 6 Assignment: Ratio Analysis

Target: 

Exercise sound business and financial management principles in healthcare settings through process mapping and strategic planning

 

  • Discuss the meaning of ratio analysis in healthcare.
  • Pick only one (1) ratio from EACH major group from the financial statements. (e.g. Current ratio, ROE, Debt to equity, ALOS)
  • Major Groups:
    • Liquidity ratios (Current ratio, Days Cash-on-Hand, Quick Ratio)
    • Profitability ratios (ROE, ROA, Total Margin, Operating Margin)
    • Leverage/Capital Structure Ratios (Debt ratio, Equity ratio, Debt to Equity Ratio)
    • Nonfinancial Ratios (Occupancy rate, payer mix, ALOS, Expense per discharge, FTE per bed, HMO penetration)
  • Discuss one (1) ratio (from EACH major group) using the following criteria:
    • What is the meaning of each ratio?
    • Evaluate the meaning of the ratio related to the financial health of the health care organization. Show the calculations.
    • Explain the factors that affect the results related to the financial health of the organization.

SOLUTION

Ratio Analysis in Healthcare

Student

University of Maryland Global,

HMGT 322

9/24/2024

Ratio Analysis in Healthcare

In the healthcare industry, sound financial management is crucial to ensuring operational sustainability and patient care quality. Ratio analysis serves as a fundamental tool in this process, allowing healthcare organizations to assess their financial health, make informed decisions, and devise strategic plans for long-term success. The purpose of this paper is to analyze selected financial ratios to demonstrate their significance in decision-making within healthcare organizations. It focuses on Mayo Clinic’s financial data for 2021 by examining four key ratios from major groups: liquidity, profitability, leverage/capital structure, and nonfinancial ratios. Each ratio will be defined, calculated using data from Mayo Clinic’s financial report, and evaluated with the organization’s financial health. This analysis is intended to provide an understanding of the broader value of ratio analysis in healthcare management.