Patton-Fuller Ratio Computation Essay

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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…show more content…
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
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