Explain why the ratios are different between two industries

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Reference no: EM13890484

Given the following industry average ratios for managed care organizations and nursing homes, explain why the ratios are different between the two industries.

Managed Care Industry Averages:

Total margin - 3.8%

Total asset turnover - 2.1

Equity multiplier - 3.2

Return on equity - 25.5%

Return on assets - 8.0%

Current ratio - 1.3

Days cash on hand - 41 days

Average collection period - 7 days

Debt ratio - 69%

Debt-to-equity ratio - 2.2

Times interest earned ratio - 2.8

Fixed asset turnover ratio - 5.2

Nursing Home Industry Averages:

Total margin - 3.5%

Total asset turnover - 1.5

Equity multiplier - 2.5

Return on equity - 13.1%

Return on assets - 5.2%

Current ratio - 2.0

Days cash on hand - 22 days

Average collection period - 19 days

Debt ratio - 71%

Debt-to-equity ratio - 2.5

Times interest earned ratio - 2.6

Fixed asset turnover ratio - 1.4

Reference no: EM13890484

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