Estela’s Answer:

In the analysis of liquidity ratios, the most commonly used is the current ration and ration of 2, is
considered good. The LHC's ratio dropped from 2.13 to 1.98 form 2018 to 2019.
Efficiency ratios LHC's in accounts the ratio was great, because the average days converted the bills
to cash dropped from 110.8 in 2018 to 76.84 in 2019.
Solvency ratios in the interest coverage ratio checks if LHC's profits are enough to pay the interest
its owed form 1.18 in 2018 to 1.6 in 2019 which is not that bad. Also, the debt coverage ratio to pay
the long-term debts increased from 1.68 in 2018 to 2.2 in 2019 which is not bad, but not that good
either.

Our Comments

Liquidity analysis show that short term liquidity(Quick analysis( was totally ignored while
analysing the financial statements so true picture was not conveyed, both current and quick
ratios are showing decline as -0.14% & -0.17% respectively which questionable solvency in
short term.

No doubt efficiency shows positive impact by reducing sales collection in number of days
from 110.8 to 76.84 but at the same time when sales are compared with total assets they are
now showing same positive results and only 0.0135% impact observed which indicates to
enhance proper focus on cash sales.

Solvencies are showing overall positive impact of 1.4% which is good sign and will be
addressed by consistance implementatin of policies.

Ricardo’s Answer:
Greetings, here it is my analysis of the Local Community Hospital’s liquidity, efficiency
and solvency.

Analysis of liquidity ratios

It assesses if the entity has an adequate level of cash or near-cash assets. The most
commonly used is the current ratio and a ratio of 2 is considered good as mentioned by
Finkler. The current ratio of LHC hospital dropped from 2.13 to 1.98 from 2018 to 2019
but both are around the goal so that is good. Now, I calculated the quick ratio to check
the entity’s capacity to quickly respond to the unexpected in terms of financial
responsibilities, and it was 1.15 in 2018 and 0.97 in 2019 which at first sight it might be
a little worrisome, but when you see that the entity has increased its inventory and long
term assets (building and equipment) it seems they are investing in growing so cash
needed to be sacrificed. There is no other way to grow, though.
Our Comments

This analysis shows positive sign both in current and quick as an overall whereas there is
declining trend observed both in currenct and quick analysis as as -0.14% & -0.17%
respectively which are itself evident of questionable solvency in short term with decling trend

Analysis of efficiency ratios

It assesses how efficiently the entity is operating in order to improve their profits or
increase the quantity and quality of services. When checking the LHC’s days in
accounts receivable ratio, it was excellent to know the average days to convert a bill to
cash dropped from 110.8 days in 2018 to 76.84 days in 2019. On the other hand, it was
worrisome to know that the average time for LHC to pay its bills increased from 106.9 in
2018 to 113.1 in 2019, as expressed in the days in accounts payable ratio, and this is
above average as mentioned by Finkler. Furthermore, when including liabilities, the
average time raised a lot to 188.03 days in 2018 and 202.21 in 2019 (almost doubled)
and that is not acceptable and should be thoroughly investigated by LHC. Finally, the
total asset turnover ratio examined the revenue generated per every one dollar in
assets, and it was virtually unchanged from 2018 to 2019, 0.36 and 0.37, respectively,
and both are way below the average mentioned by Finkler.

Our Comments

Conversion of bills to cash in 2019 are showing remarkable improvement by reducing

number of days that is almost 34 days early when compared to the reports of 2018,
similarly when revenues are compared to total assets it shows a positive impact i.e
1.4% improvement, so both of these indicatives in efficiency are showing positive
improvement rather to much worry about that.

Analysis of solvency ratios

It assesses the entity’s riskiness long term. Regarding LHC’s ability to meet interest and
principal payments from liabilities. The interest coverage ratio checks if LHC’s profits
are enough to pay the interest owed, and it increased from 1.18 in 2018 to 1.6 in 2019
which is good. Now, the debt coverage ratio checks the ability to pay long-term debts,
and that ratio increased from 1.68 in 2018 to 2.2 in 2019, which is very positive as well.
Nevertheless, LHC’s overall debt burden calculated by the long term debt to net assets
ratio, was not small, it decreased from 3.152 in 2018 to 2.613 in 2019 which is indeed a
good trend, however I cannot avoid to worry about the fact that per every dollar in net
assets there are 2.6 to 3.1 dollars in debt.

Our Comments

In solvency position there is reduction of 3.6% in long term assets and similarly long term
liablities are showing reduction of 4.2% which is a over goods improvment sign of 0.60% so
we can say that solvency analysis have positive impact rather to worry about.

Khaila’s Answer:
Using the table provided, I would rate the hospitals overall financial health as decent. I notice a
few discrepancies following the hospital's liabilities between 2018 and 2019. The availability of
liquid assets increased significantly between the two years. The trend tends to show that the
hospital's popularity and/or patient attendance notably increased.

Our Comments

Financial health of the hospital as not as decent as analysed becuase both current and quick
analysis are rising solvecy questions in short term keeping in view the decling trend in boith analysis
where curernt ratio droped –0.2% from the defined standards.