Reference no: EM132976764
Consider the attached financial statements for Healthy Body Nursing Home, Inc., a for-profit, long-term care facility.
Perform a DuPont analysis on Healthy Body Nursing Home, Inc. Assume that the industry average ratios are as follows:
Total margin: 3.5%
Total asset turnover: 1.5
Equity multiplier: 2.5
Return on equity: 13.1%
Calculate and interpret the following ratios. Industry averages have been listed next to each ratio
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
Problem 1: Provide an interpretation for each of the eight ratios listed above. Specifically, what is the final answer telling you about the financial health of the business?
Problem 2: Discuss what the results of each ratio mean in relation to the industry averages. In your opinion, what can the financial manager of Healthy Body Nursing Home, Inc. do to improve the overall financial health of the business? What are some of the major limitations of ratio analysis that must be considered? Regardless of the specific line of business, should all healthcare businesses use the same set of ratios when conducting a financial statement analysis? Explain your answer.
|
Prepare journal entries for acceptance of promissory note
: Prepare journal entries for Acceptance of promissory note. On December 1, Christina Interiors accepted a 90 day, 7.5%, promissory note from Yellow Brick Home.
|
|
What journal entry should brower make on december
: Brower corporation owns a manufacturing plant, What journal entry (if any) should Brower make on December 31, 20X1, to record the intended expropriation?
|
|
How much of the income should be converted
: Moana is a single taxpayer who operates a sole proprietorship. How much of the income should be converted into corporate income
|
|
Discuss the four types of dividends
: What may happen to a company's share price when dividends are announced or paid? Discuss the 4 types of dividends. Which of the 4 is used most often and why?
|
|
What results of each ratio mean in relation to the industry
: What the results of each ratio mean in relation to the industry averages. In your opinion, what can the financial manager of Healthy Body Nursing Home
|
|
Determine the number of months
: Your best friend is saving $1,800.00 and will earn 0.17 percent per month. Determine the number of months until the account grows to $2,000.00
|
|
How much can be paid out as dividends
: Assume a firm has a net profit $20 million last year, its target capital structure is 30% debt and 70 equity, How much can be paid out as dividends
|
|
Determine diane total income tax deduction per pay period
: Determine Diane's total income tax deduction per pay period. Diane works for Downy Corporation in Alberta and earns an annual salary of $44,550.00 paid
|
|
Determine what the current break-even point is in units
: Based on the three alternatives (do nothing, purchase the new printer, and buy paper in bulk), what would you suggest the owner do and why?
|