Patton-Fuller Ratio Computation Essay

1846 Words Aug 2nd, 2013 8 Pages
Patton-Fuller Ratio Computation

July 8, 2013

HCS/405

Regina Robinson

The Eight Basic Ratios

1. Current Ratio (Unaudited)

2009 Current Assets $128,867 ÷ Current Liabilities $23,807= 5.4129877 or 5.413 (5 to 1)

2008 Current Assets $130,026 ÷ Current Liabilities $8,380 = 15.516229 or 15.516 (15 to 1)

Current Ratio (Audited)

2009 $128,867 ÷ $23,807= 5.3709833 or 5.371(5 to 1)

2008 $130,026 ÷ $8,380= 15.516229 or 15.516 (15 to 1)

Disagree:

This ratio is consistently a measure of short-term debt paying ability (Baker & Baker, 2011). However, it must be carefully interpreted (Baker & Baker, 2011). Observationally, the CEO’s
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The statements made in the CEO’s report to the board prove to be incorrect. Although the cash and cash equivalents plus net receivables were a higher dollar value in 2009, the liabilities were also higher in 2009. More inflow of revenue is good but does not necessarily mean the hospital was more profitable. Both the unaudited and audited statements show PFCH had a higher dollar value of liabilities in 2009 than in 2008. The ratio of cash and cash equivalents plus net receivables versus current liabilities in 2009 was only 3 to 1. In 2008, it was a whopping 9 to 1. Again, this shows the hospital was more profitable in 2008.

3. DCOH (Unaudited)

2009 $462,293- $36,036=$426,257 ÷365=1,168, 22,995 ÷ 1,168=19.6 days

2008 $437,424- $24,955=$412,469 ÷ 365= 1,130, 41,851 ÷ 1,130= 37 days

DCOH (Audited)

2009 $463,293-36,036= $427,257 ÷ 365= 1,171, 22,995 ÷ 1,171= 19.6 days

2008 $437,424-$24,955= $412,469 ÷ 365= 1,130, 41,851 ÷ 1,162= 36.0 days

Disagree:

The unaudited financial statements show that all financial ratios have made improvements. The CEO states, that this year shows a success with over $16 million in gains. However, disagreement lies on the subject of the use of the money and in what area it successfully accomplished objectives. It does