Activity Instructions: Ratio Analysis
Using the following financial information for ABC Medical Center, you are going to conduct financial ratio analysis from the information contained in the table below to make conclusions from this data. Your Activity responses should be both grammatically and mechanically correct and formatted in the same fashion as the Activity itself. If there is a Part A, your response should identify a Part A, etc. In addition, you must appropriately cite all resources used in your response and document them in a bibliography using APA style. (A 4-page response is required for the combination of Parts A, B and C.)
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ABC Medical Center
12/31/03
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ABC Medical Center
12/31/02
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Net Income
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2,096,788
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Net Income
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2,280,365
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Operating Revenues
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44,699,080
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Operating Revenues
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38,306,797
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Property Taxes
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2,307,727
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Property Taxes
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2,118,989
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Investment Income
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552,599
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Investment Income
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523,593
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Total Assets
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65,675,421
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Total Assets
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62,245,135
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Net Assets
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30,369,316
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Net Assets
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27,583,399
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Current Assets
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21.547.677
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Current Assets
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18,061,691
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Current Liabilities
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5,235,699
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Current Liabilities
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4,615,954
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Cash
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8,683.458
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Cash
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6,173,495
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Marketable Securities
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1,583,053
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Marketable Securities
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1,453,156
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Total Expenses
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43,154,891
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Total Expenses
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36,550,025
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Depreciation
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952,861
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Depreciation
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907,526
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Long Term Liability
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30,070,406
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Long Term Liability
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30,045,782
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Net Accounts Receivable
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8,195,437
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Net Accounts Receivable
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7,659,899
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Net Patient Revenue
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42,251,541
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Net Patient Revenue
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35,913,380
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Total Revenue
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47,559,406
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Total Revenue
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40,780,161
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Net Fixed Assets
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34.438.331
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Net Fixed Assets
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24,136,723
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Part A Calculate the following ratios for ABC Medical Center for years 2003 and 2002.
1. Profit Margin
2. Return on Assets (ROA)
3. Return on Equity (ROE)
4. Current Ratio
5. Days Cash on Hand (Short-Term)
6. Equity Funding
7. Long-Term Debt to Equity
8. Days in Patient Accounts Receivable
9. Fixed Asset Turnover
10. Working Capital
Part B Determine if each ratio calculated in Part A represents an improvement or a negative development in ABC's financial condition. Provide a brief explanation (1-2 sentences) for your answer.
Part C For each ratio calculated and discussed in Part A, provide an explanation, in terms of the accounts composing the ratio, for any increase or decrease in that ratio from 2002 to 2003. For example, "the current ratio decreased due to a combination of decreased assets and increased liabilities."