Financial Analysis Report

Stanford Health Care
Financial Analysis Report
Mustafa Mahmood
Maryam Hussain A Aldubaisi
Submitted
To
Dr Sung W. Choi
Pennsylvania State University Harrisburg Campus
1
Table of contents
Title Page numbers

Objective/ Introduction 3-4
Interpretation of organization’s 5-7
Statements of Cash flow
Profitability ratios 8-9
Liquidity Ratios 9
Working Capital Ratios 10
Solvency Ratios 10-11
Organizations Financial condition 11-12
Evaluation
Recommendations for higher 12
management
Appendix 13-25
References 25
2
Objective:
This study analyzes financial statements of Stanford Health Care for the years 2016-18, by
using key financial ratios and determine their financial health, performance and position.
Introduction
Stanford Health Care (SHC) founded in 1959, is a renowned university-owned, not for profit
academic medical center which is delivering world-class health care. Stanford is providing
tertiary and quaternary treatments for complex and rare disease and disorders and primary
care for their community. They have six centers of excellence: Cancer Center, Heart Center,
Neuroscience Center, Orthopedic Surgery and Sports Medicine, Surgical Services Program
and Transplantation Programs.
It is one of the US best organizations to provide health care facilities. In 2017 the hospital
was ranked 9th among 5462 medical centers’ in the US. In 2018 Stanford ranked second in
US in the specialty of otolaryngology (head and neck surgery). Their extraordinary services
have also been recognized by Magnet Designation three consecutive times as well as many
other awards, such as the Leapfrog Group, and HIMSS Analytics. ("Patient Experience
Case Study - Stanford Health Care - The Beryl Institute - Improving the Patient
Experience", 2019).
SHC produces clinical innovation across its inpatient services, specialty health centers,
physician offices, virtual care offerings and health plan programs. Being a nonprofit
organization, they maintain a strong commitment to the health of its community members and
3
dedicates considerable resources to support their benefit program ("Community
Partnerships", 2019), eg during year 2016-17, SHC invested nearly $362 million (2019) in
services and activities to improve the health of the communities serves. Their community
services are wide ranging that ensure health care access to the elderly and indigent patients
and produce highly valuable service programs to improve the health status of the community.
Mission Statement:
• To Care
• To Educate
• To Discover
Vision Statement:
Healing humanity through science and compassion, one patient at a time (2019).
Community Served:
Although SHC cares for patients from throughout California, as well as nationally and
internationally, a majority of its patients, nearly 65 percent, live in San Mateo and Santa
Clara counties (2019).
SHC community benefit activities fall into three major categories (2019):
1. Benefits for vulnerable populations, 78%.
2. Benefits for the community at large, 1%
3. Health research, education, and training programs, 21%
SHC operates multiple outpatient facilities and physical practices throughout the California
Bay Area and beyond and operate with more than 6,000 employees in 300 facilities
As a not-for-profit organization, Stanford Health Care is investing their surpluses in operating
innovative services, facilities, and community health programs. Every three years they carry
out assessment of the situation to identify compelling health needs affecting community and
work out strategies to improve the health of community members.
4
Interpretation of Organization’s statements of cash flows
Cash flow ratios are the comparisons of cash flow statement components with other
components of cash flow statement and other components of financial statement. These cash
flow ratios are more reliable indicators of liquidity than balance sheet ratios such as current
and quick ratio. Lenders and rating agencies have also long used these ratios for evaluation of
risk. The information contained on a cash flow statement stresses the existing differences
between the operating profits of a firm and the decrease or increase in bank/cash balance over
a similar accounting period. Due to this, a cash flow statement is important to shareholders,
suppliers, creditors as well as other stakeholders to a business entity (Knechel et al, 2007).
 Cash flow margin ratio:
CASH FLOW FROM OPERATIONS/ SALES (CFO) *
100
2018 694,704/4910,546 * 100 14%
2017 335,336 /4454,401* 100 7.50%
This ratio tells us how much cash is obtained on every dollar of sales made. Though cash
flow margin ratio of 14% in the year 2018 do not appear good, yet has improved significantly
if compared with year 2017 i.e. It has almost doubled in year 2018 comparing with the
previous year.
5
 Current liability coverage ratio:
CFO/ CURRENT LIABILITIES
2018 694,704/1,089,736 0.63
2017 335,336/1,075,625 0.31
This ratio is known to be a better indicator of current liability as compared to current ratio
and quick ratio and reveals how well the company is handling its current liabilities. Current
year ratio of 0.63 is lesser than one, which means that for every dollar of current liability, the
company has to pay 63 cents.
By looking over two-year trend ratio, we conclude that the company has improved by 103%.
 Cash generating power ratio:
CFO/CFO + CASH FLOW FROM INVESTING + CASH
FLOW FROM FINANCING
2018 694,704/694,704 + (990691) + 238,134 -12
2017 335,336/335,336 + (428,895) + 113,208 17
Stanford has strong CFO generation power in comparison to cash flow from investing and
financing which is a very positive indication. In the year 2018, negative ratio shows that the
overall net cash flow during the year was negative due to huge cash outflow in investing
activities.
 Asset efficiency ratio:
CFO/ TOTAL ASSETS*100
2018 694,704/7214,849 * 100 9.60%
2017 335,336 /6,229,612* 100 5.40%
6
This ratio is similar to return on assets (ROA) but instead of using net income the ratio uses
CFO. This ratio tells us how well company uses its assets to generate cash flows. In 2018
asset efficiency ratio is improved by 77% over the year.
 Long term debt coverage ratio:
CFO/ Long term debts
2018 694,704/2,163,929 0.32
2017 335,336/1,649,419 0.2
Looking over the year 2018 ratio of 0.32 we can conclude that for every dollar we have 32
cents to settle liabilities.
The ratio has improved by 60% over the year 2017.
External financing index ratio:
Cash flow from financing/ CFO*100
2018 238,134/694,704*100 34%
2017 113,208/335,336*100 34%
This ratio shows how much Stanford is dependent on financing comparing to operational
cash flows.
The lower the number, the lower would be dependence on financing for Stanford.
Ratio has remained stable over the years.
7
Key Ratios using balance sheet and income statement:
Profitability ratios:
Profit margin ratio:
(Change in unrestricted net assets/ Total unrestricted revenue and
support) * 100
2018 (410952/4910546) * 100 8.37%
2017 (424003/4454401) * 100 9.50%
As Stanford is non-profit organization its basic objective is not to prioritize profit. Yet it
would like to have positive profit margin to indicate that the organization is doing well. But
an excessive margin would indicate that dues are too high which would rather discourage the
donors. Although, the margin has decreased over the year, yet 8.37% of profit margin in year
2018 seems quite normal.
Operating reserve ratio:
net assets without restriction/ Annual expense –
depreciation
8.88
2018 3304125/4589887-176742 * 12
months
8.52
2017 2893173/4220519-154686 *12
months
High operating reserve ratio indicates that organization is in good financial shape. This ratio
indicates that how many months Stanford can sustain without any revenue. Over the years the
ratio has remained stable and current year eight-month figure is a positive indication for
Stanford.
8
Return on net asset ratio:
changes in net assets/ Total net assets*100
10.40
2018 (410952/3961184*100
%
12.10
2017 (424003/3504568) *100
%
RONA is financial performance measure which shows how well the company is using its net
assets to generate income. Higher the ratio better the performance. This ratio has decreased
by 14% over the year that is from 12.1% to 10.4% which indicates poor use of resources
compared to previous years.
Liquidity Ratios:
Current ratio:
Currents assets/ Currents liabilities
2018 1857453/1089736 1.7
2017 1724575/1075625 1.6
Current ratio is widely used. This ratio indicates that the organization has more currents
assets to settle current liabilities. A ratio of 1.7 this year is very good indicator regarding
company’s strong liquidity which has improved over the year.
Quick ratio:
(currents assets – inventory)/ Current liabilities
2018 (1857453-58884)/ 1089736 1.65
2017 (1724575-56559)/ 1075625 1.55
9
It is similar to current ratio minus inventory. Since Stanford hold minimum inventory due to
its being in service sector, the quick ratio is similar to the current ratio.
Working Capital Ratios:
Account receivables turnover days:
(receivables/ sales) *365
2018 (623077/4910546) *365 46 days
2017 (610734/4454401) *365 50 days
This ratio shows how many days Stanford took to collect its receivables. Collection period of
46 days in the year 2018 shows an improvement vis-a-vis 50 days in the year 2017.
Collection period of 30 to 60 days is considered as normal which can be improved further by
allowing early settled discounts, better credit control and efficient collection mechanism.
Days of cash on hand
cash+ marketable securities / (Expenses – depreciation – bad debts)
* 365
2018 (652256+391314/4589887-176742-57437) *365 87 Days
2017 (710109+233533/4220519-154686-77004) *365 86 Days
Ratio explains how much cash an organization hold to cover its expenses and its calculated in
days. Stanford hold enough cash to cover expenses of almost 87 days. Ratio remains stable
over the year.
Solvency Ratios:
Debt to Asset Ratio:
Total debts/ Total assets*100
2018 2163929/7214849 * 100 29%
10
2017 1649419/6229612 * 100 26%
Debt to asset ratio is a leverage ratio which shows how many assets are financed from debt.
29% figure seems fine for this organization with sound operating reserve ratio. It has
however marginally increased over the year.
Debt to Net Asset ratio:
Total debts/ Total net assets*100
2018 (2163929/3,961,184) * 100 55%
2017 (1649419/3,504,568) * 100 47%
Being a not for profit organisation Stanford doesn’t have equity. Net assets have been used to
calculate the gearing of Stanford. 55% debt to net asset ratio in year 2018 do not sound good
as Stanford is relying on debt more the 50% of the net assets it has. Also, the ratio has
increased by 17% over the year which also is not good sign.
Evaluation of the organization’s financial condition:
Strengths: Stanford is financially stable organisation having strong cash position and asset
base. Its cash flows from operation are almost doubled over the year, which show financial
efficiency and management competence. Stanford asset base has been increased by one
billion comparing to increase in liabilities of approximately $0.5 billion. Stanford income
from operation has shown great improvement due to professional competence and operational
efficiency
11
Weakness: Stanford holds huge amount of unutilised cash stack which is more than half a
billion dollars. This cash has an opportunity cost and must be utilised in an appropriate
method not at the expense of cash running out situation. The debt base is piling up which
makes the organisation riskier and might lead to decrease its credit rating.
As a non-profit organisation Stanford prime objective is not to make profit. Margins and
return on assets have fallen but still profitability ratios look good with return on asset above
10%. Stanford liquidity and working capital ratios have also been improved marginally and
liquidity position is quite good shape. The organisation seems heavily geared but looking at
cash flow position it does not pose any threat.
Recommendations for Higher Management:
Stanford is a financially sound company; all credit goes to competent management.
However, there is always a room for improvement.
As a non-profit organisation, the unutilised cash should either be utilised in short term
investment or in operational activities. Holding such a huge cash may make donors rethink of
their further donations as such they see their donations piled up, rather being spent on the
welfare. Management should also try not to put too much reliance over debt rather on
donations which are interest free.
Being non-profit organisation management should focus on delivering best care in affordable
prices, a huge profit from operation might not be in line with their mission statement.
12
Appendix
Appendix A
Consolidated Balance Sheets
August 31, 2018 and 2017
(in thousands of dollars)
2018 2017
$ $
Assets
Current assets:
Cash and cash equivalents 652,256 710,109
Short term investments 391,314 233,533
Patient accounts receivable 623077 610734
Other receivables 79036 71112
Inventories 58,884 56,559
Prepaid expenses and other 52,886 42,528
Total current assets 1,857,453 1,724,575
Investments 509,781 111,664
Investments at equity 80,989 66,255
Investments in University managed pools 1,400,839 1,287,193
Assets limited as to use, held by trustee 58,134 58,134
Property and equipment, net 3,279,048 2,869,346
Other assets 86,739 112,445
Total assets 7,214,849 6,229,612
13
Liabilities and Net Assets
Current liabilities:
Accounts payable and accrued liabilities 449,192 307,899
Accrued salaries and related benefits 209,490 255,759
Due to related parties 98,942 71,429
Third-party pay or settlements 34,474 18,149
Current portion of long-term debt 14,505 13,335
Revolving line of credit 135,000
Debt subject to short-term remarketing arrangements 228,200 228,200
Self-insurance reserves and other 54,933 45,854
Total current liabilities 1,089,736 1,075,625
Self-insurance reserves 139,841 130,816
swap liabilities 182,527 245,966
Other long-term liabilities 122,944 31,363
Pension liability 6,650 51,745
Long-term debt, net of current portion 1,711,967 1,189,529
Total liabilities 3,253,665 2,725,044
Net assets:
Unrestricted:
Stanford Health Care 3,285,398 2,871,113
Non controlling interests 18,727 22,060
Total unrestricted 3,304,125 2,893,173
Temporarily restricted 648,826 603,251
14
Permanently restricted 8,233 8,144
Total net assets 3,961,184 3,504,568
Total liabilities and net assets 7,214,849 6,229,612
Appendix B
Consolidated Statements of Operations and Changes in Net Assets
Years Ended August 31, 2018 and 2017
2018 2017
Operating revenues:
Net patient service revenue 4,735,366 4,311,530
Provision for doubtful accounts -57,437 -77,004
Net patient service revenue less provision for doubtful

4,677,929
accounts 4,234,526
Premium revenue 92,654 80,647
Other revenue 135,597 129,324
Net assets released from restrictions used for operations 4,366 9,904
Total operating revenues 4,910,546 4,454,401
Operating expenses:
Salaries and benefits 2,091,260 1,986,360
Professional services Supplies 46,146 42,851
Supplies 667,379 586,056
Purchased services 1,216,992 1,136,020
Depreciation and amortization 176,742 154,686
Interest 35,434 43,643
15
Other 477,661 384,354
Expense recoveries from related parties -121,727 -113,451
Total operating expenses 4,589,887 4,220,519
Income from operations 320,659 233,882
Interest and investment income 31,122 15,325
Earnings on equity method investments 7,048 5,114
Increase in value of University managed pools 110,984 144,829
Loss on extinguishment of debt -47,613
Interest rate swaps mark to market adjustments 48,043 85,368
Excess of revenues over expenses 470,243 484,518
Other changes in unrestricted net assets:
Transfer to Stanford University, net -98,183 -69,376
Transfer to Lucile Salter Packard Children's Hospital 2,068
Change in net unrealized gains on investments 9,438 1,058
Net assets released from restrictions used for:
Purchase of property and equipment 309 1,320
Change in pension and postretirement liability 28,277 6,182
Non-controlling capital contributions (distributions) -1200 301
Increase in unrestricted net assets 410952 424003
Changes in temporarily restricted net assets:
Transfer from Stanford University Contributions and other 2,177 2,748
Contributions and other 44,894 28,541
Investment income 712 4,662
Gains on University managed pools 2,467 1,438
16
Operations -4,366 -9,904
Purchase of property and equipment -309 -1,320
Increase in temporarily restricted net assets 45,575 26,165
Changes in permanently restricted net assets: Contributions
Contributions 89 250
Increase in permanently restricted net assets 89 250
Increase (decrease) in net assets Net assets, beginning of year 456,616 450,418
beginning of year 3,504,568 3,054,150
Net assets, end of year 3,961,184 3,504,568
Appendix C
Consolidated Statements of Cash Flows
2018 2017
Cash flows from operating activities:
Change in Stanford Health Care net assets 459,949 448,491
Change in non controlling interests -3,333 1,927
Total change in net assets 456,616 450,418
Adjustments to reconcile change in net assets to
net cash provided by operating activities:
Provision for doubtful accounts 57,437 77,004
17
Change in fair value of interest rate swaps -63,439 -85,368
Increase in value of University managed pools -110,984 -144,829
Unrealized gains on investments -10,700 -5,138
Realized gains on investments -22
(Excess) deficit of income of equity method investees over distributions -2,047 -12,154
Contributions received for long lived assets or endowment and net equity -37,958
Net equity transfers to/from related parties

93,938
44,639
Changes in operating assets and liabilities:
Patient accounts receivable -69,780 -127,805
Due to related parties 4,274 -24,877
Other receivables, inventory, other assets, prepaid expenses and other s 1,108 4,174
Accounts payable, accrued liabilities and pension liabilities 89,663 -22,131
Accrued salaries and related benefits -46,269 18,940
Third-party pay or settlements 16,325 -4,799
Cash provided by operating activities 694,704 335,336
Cash flows from investing activities:
Purchases of investments -593,592 -204,822
Sales of investments 47,143 68,350
Purchases of investments at equity -10,843 -12,752
Purchases of investments in University managed pools -1,524 -1,764
Sales of investments in University managed pools 119 179,989
Decrease in assets limited as to use and other 58,134 177,654
Purchases of property and equipment -474,735 -635,550
18
Cash used in investing activities -990,691 -428,895
Cash flows from financing activities:
Borrowing on revolver -135,000 135,000
Costs of issuance of debt -6783 -71
Payment of long-term debt and capital lease obligations -544,331 -18,708
55899
40,747
Contributions received for long lived assets or endowment and net equity
transfers to/from related parties -70,699 -3,013
Cash provided by (used in) financing activities 238,134 113,208
Net increase in cash and cash equivalents 57,853 19,649
Cash and cash equivalents, beginning of year 710,109 690,460
Cash and cash equivalents, end of year 652,256 710,109
Appendix
Appendix D
Consolidated Balance Sheets
August 31, 2017 and 2016
2017 2016
$ $
Assets
Current assets:
Cash and cash equivalents 710,109 690,460
19
Short term investments 233,533 103,627
Patient accounts receivable 610734 559,933
Other receivables 71112 92,961
Inventories 56,559 50,016
Prepaid expenses and other 42,528 36,273
Total current assets 1,724,575 1,533,270
Investments 111,664 104,038
Investments at equity 66,255 41,609
Investments in University managed pools 1,287,193 1,316,489
Assets limited as to use, held by trustee 58,134 235,788
Property and equipment, net 2,869,346 2,401,880
Other assets 112,445 124,263
Total assets 6,229,612 5,757,337
Liabilities and Net Assets
Current liabilities:
Accounts payable and accrued liabilities 307,899 335,995
Due to related parties 71,429 61,308
Third-party pay or settlements 18,149 22,948
Current portion of long-term debt 13,335 13,756
Revolving line of credit 135,000
Debt subject to short-term remarketing arrangements 228,200 228,200
Self-insurance reserves and other 45,854 43,232
20
Total current liabilities 1,075,625 942,258
Other long-term liabilities 277,329 355,683
Pension liability 51,745 65,463
Long-term debt, net of current portion 1,189,529 1,220,789
Total liabilities 2,725,044 2,703,187
Net assets:
Unrestricted:
Stanford Health Care 2,871,113 2,449,037
Non-controlling interests 22,060 20,133
Total unrestricted 2,893,173 2,469,170
Temporarily restricted 603,251 577,086
Permanently restricted 8,144 7,894
Total net assets 3,504,568 3,054,150
Total liabilities and net assets 6,229,612 5,757,337
Appendix E
Consolidated Statements of Operations and Changes in Net Assets
2017 2016
Operating revenues:
Net patient service revenue 4,311,530 4,019,285
Provision for doubtful accounts -77,004 -126,280
21
Net patient service revenue less provision for doubtful
accounts 4,234,526 3,893,005
Premium revenue 80,647 72,292
Other revenue 129,324 122,996
Net assets released from restrictions used for operations 9,904 9,372
Total operating revenues 4,454,401 4,097,665
Operating expenses:
Salaries and benefits 1,986,360 1,850,124
Professional services Supplies 42,851 49,846
Supplies 586,056 531,130
Purchased services 1,136,020 1,058,182
Interest 43,643 39,661
Other 384,354 389,199
Expense recoveries from related parties -113,451 -104,965
Total operating expenses 4,220,519 3,949,619
Income from operations 233,882 148,046
Interest and investment income 15,325 13,635
Earnings on equity method investments 5,114
Increase in value of University managed pools 144,829 24,181
Interest rate swaps mark to market adjustments 85,368 -115,958
Excess of revenues over expenses 484,518 69,904
Other changes in unrestricted net assets:
Transfer to Stanford University, net -69,376 -88,944
Transfer to Lucile Salter Packard Children's Hospital -3,300
22
Change in net unrealized gains on investments 1,058 1,245
Purchase of property and equipment 1,320 973
Change in pension and postretirement liability 6,182 -80
Non-controlling capital contributions (distributions) 301 -1,000
Increase (decrease) in unrestricted net assets 424,003 -21,202
Changes in temporarily restricted net assets:
Transfer from Stanford University Contributions and other 2,748 2,645
Contributions and other 28,541 20717
Investment income 4,662 744
Gains on University managed pools 1,438 1683
Operations -9,904 -9,372
Purchase of property and equipment -1,320 -973
Increase in temporarily restricted net assets 26,165 1544
Changes in permanently restricted net assets: Contributions
Contributions 250 200
Increase in permanently restricted net assets 250 200
Increase (decrease) in net assets Net assets, beginning of year 450,418 -5,558
beginning of year 3,054,150 3,059,708
Net assets, end of year 3,504,568 3,054,150
Appendix F
23
Consolidated Statements of Cash Flows
2017 2016
Cash flows from operating activities:
Change in Stanford Health Care net assets 448,491 -2,712
Change in non-controlling interests 1,927 -2,846
Total change in net assets 450,418 -5,558
Adjustments to reconcile change in net assets to
net cash provided by operating activities:
Provision for doubtful accounts 77,004 126,280
Change in fair value of interest rate swaps -85,368 115,958
Increase in value of University managed pools -144,829 -24,181
Unrealized gains on investments -5,138 -1,712
Realized gains on investments -22
(Excess) deficit of income of equity method investees over distributions -12,154 3,101
transfers to/from related parties Changes in operating assets and
liabilities: 44,639 79,767
Changes in operating assets and liabilities:
Patient accounts receivable -127,805 -135,492
Due to related parties -24,877 474
Other receivables, inventory, other assets, prepaid expenses and other s 4,174 -34,759
Accounts payable, accrued liabilities and pension liabilities -22,131 82,724
24
Third-party pay or settlements -4,799 13,930
Cash provided by operating activities 335,336 395,938
Cash flows from investing activities:
Purchases of investments -204,822 -59,290
Sales of investments 68,350 67,052
Purchases of investments at equity -12,752 -13,427
Purchases of investments in University managed pools -1,764 -1,729
Sales of investments in University managed pools 179,989 150,240
Decrease in assets limited as to use and other 177,654 344,913
Purchases of property and equipment -635,550 -619,570
Cash used in investing activities -428,895 -131,811
Cash flows from financing activities:
Borrowing on revolver 135,000
Costs of issuance of debt -71
Payment of long-term debt and capital lease obligations -18,708 -15,951
transfers to/from related parties -3,013 -33,393
Cash provided by (used in) financing activities 113,208 -49,344
Net increase in cash and cash equivalents 19,649 214,783
Cash and cash equivalents, beginning of year 690,460 475,677
Cash and cash equivalents, end of year 710,109 690,460
References:
25
Community Partnerships. (2019). Retrieved from
https://stanfordhealthcare.org/about-us/community-partnerships.html
Patient Experience Case Study - Stanford Health Care - The Beryl Institute - Improving the
Patient Experience. (2019). Retrieved from
https://www.theberylinstitute.org/page/CASE0417
(2019)[Ebook].Retrieved from
https://oshpd.ca.gov/ml/v1/resources/document?rs:path=/Data-And-Reports/Community-
Benefit-Plans/2016/Stanford-University-Hospital-CBP-2016.pdf
26

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Stanford Health Care

Financial Analysis Report

Maryam Hussain A Aldubaisi

Pennsylvania State University Harrisburg Campus

Title Page numbers

Interpretation of organization’s 5-7

Statements of Cash flow

Profitability ratios 8-9

Working Capital Ratios 10

Solvency Ratios 10-11

Organizations Financial condition 11-12

Recommendations for higher 12

and Transplantation Programs.

Clara counties (2019).

1. Benefits for vulnerable populations, 78%.

2. Benefits for the community at large, 1%

3. Health research, education, and training programs, 21%

As a not-for-profit organization, Stanford Health Care is investing their surpluses in operating

work out strategies to improve the health of community members.

 Cash flow margin ratio:

CASH FLOW FROM OPERATIONS/ SALES (CFO) *

2018 694,704/4910,546 * 100 14%

2017 335,336 /4454,401* 100 7.50%

CFO/ CURRENT LIABILITIES

2018 694,704/1,089,736 0.63

2017 335,336/1,075,625 0.31

company has to pay 63 cents.

 Cash generating power ratio:

CFO/CFO + CASH FLOW FROM INVESTING + CASH

FLOW FROM FINANCING

2018 694,704/694,704 + (990691) + 238,134 -12

2017 335,336/335,336 + (428,895) + 113,208 17

 Asset efficiency ratio:

CFO/ TOTAL ASSETS*100

2018 694,704/7214,849 * 100 9.60%

2017 335,336 /6,229,612* 100 5.40%

asset efficiency ratio is improved by 77% over the year.

 Long term debt coverage ratio:

CFO/ Long term debts

2018 694,704/2,163,929 0.32

2017 335,336/1,649,419 0.2

cents to settle liabilities.

The ratio has improved by 60% over the year 2017.

External financing index ratio:

Cash flow from financing/ CFO*100

2018 238,134/694,704*100 34%

2017 113,208/335,336*100 34%

Ratio has remained stable over the years.

Profit margin ratio:

(Change in unrestricted net assets/ Total unrestricted revenue and

2018 (410952/4910546) * 100 8.37%

2017 (424003/4454401) * 100 9.50%

2018 seems quite normal.

Operating reserve ratio:

net assets without restriction/ Annual expense –

changes in net assets/ Total net assets*100

compared to previous years.

Currents assets/ Currents liabilities

2018 1857453/1089736 1.7

2017 1724575/1075625 1.6

company’s strong liquidity which has improved over the year.

(currents assets – inventory)/ Current liabilities

2018 (1857453-58884)/ 1089736 1.65

2017 (1724575-56559)/ 1075625 1.55