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:

• Current Ratio

= Total Current Assets / Total Current Liabilities

• Days of Cash on Hand

= Cash / (Total Operating Expense / 365 days)

• Age of Accounts Receivable

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

• Age of Physical Plant

= Accumulated Depreciation / Depreciation Expense

• Debt to Equity Ratio

= [Long Term] Debt / Net Assets

• Debt to Assets Ratio

= [Long Term] Debt / Total Assets

• Collection Rate

= Net Patient Service Revenue / Gross Patient Service Revenue

• Operating Margin Ratio

= 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:

• Review the information in this week’s Learning Resources dealing with ratios and how they are calculated.
• View the Week 3 Application Assignment Tutorial: Ratio Calculations, (video) provided in this week’s Learning Resources.
• Use the Week 3 Application (Scenario) Assignment Template, provided in this week’s Learning Resources, to complete this assignment.
• Review the Statement of Revenues and Expenses in the Week 3 application (scenario) assignment template. With the information, calculate the financial ratios