FINANCIAL ANALYSIS

Financial Analysis



Financial Analysis

OHC is a 600 bed medical hospital located in the suburbs with a population of over 1.5 million people. The course of the study will analyze the financial performance of the hospital by taking in account all the available financial information including Balance sheet and financial statement.

Ratio analysis

The ratio analysis involves comparisons. Different ratios of the company are calculated with the given data of the company from (financial statements and balance sheets). The ratio analysis provides in-depth and timely information to the management for critical strategic decision making. Different ratios are calculated in the ratio analysis which provides different aspects of the company's performance such as the current ratio. Financial ratios are the numbers that have certain connotations in the analysis of financial statements (Vandyck, 2006). These ratios are calculated by dividing two numbers (two items) were present in the financial statements.

These figures May be taken numbers from the budget or income statement or cash flow statement or taken a number from the list, and the other figure is taken from another list. It is rare that the figures are taken from the list of shareholders1. These figures are used to determine the company's profitability and financial capacity over a period of time. Financial ratios are useful marker of a firm's act of leading, performance and monetary state of affairs. Most ratios can be considered from sequence and data information provided by the statements at the year end. Financial ratios can be interpreted to examine trends and to evaluate the firm's financial to folks. In some cases, ratio analysis can predict future bankruptcy.

Liquidity Ratios

2009

2010

Current Ratio

=

Current Assets

1.51

=

8,903,000

 

2.11

=

9,208,000

 

 

Current Liabilities

 

 

5,899,000

 

 

 

4,360,000

Cash Ratio

=

Cash and Cash Equivalents

0.61

=

3,599,000

 

0.37

=

1,605,000

 

 

Current Liabilities

 

 

5,899,000

 

 

 

4,360,000

The liquidity ratios analysis of the hospital shows that the current ratio has decreased from 2.11 to 1.51 and the cash ratio has decreased from 0.61 to 0.37 both these ratios are pessimistic figures. The liquidity ratios are, like all financial ratios, the ratios between the various sizes of the reclassified balance sheet. In particular, the liquidity ratios are intended to verify if the company has a satisfactory liquidity position (Vandyck, 2006). A company is considered liquid if it is able to cope with the commitments arising with the management: pay suppliers, wages and salaries, fees, and repayment rate of loans. The current ratio of the British airways for the year 2009 has decreased from 0.97 to 0.57 which is a pessimistic figure and a negative aspect. The current ratio is calculated by dividing assets among the liabilities. The former typically include cash, marketable securities, accounts and notes receivable, and inventories, while the latter are formed from accounts and notes payable, short-term notes, current maturities of short-term debt, accrued income taxes and other accrued expenses.

Profitability Ratios

2009

2010

Profit Margin Ratio

=

Net Income

0.64

=

37370000

 

0.69

=

34,177,000

 

 

Total Sales

 

 

58,016,000

 

 

 

49,570,000

The profitability ratio shows that the profit margin of the company has increased from 0.69 to 0.64 which is a positive outlook. Profitability Ratios, known as indicators of profitability, the profitability rates are the basic metrics that tell about the swiftness ...