Asses the Financial Status of the Hospital,

¶ … asses the financial status of the hospital, I've used the indicators frequently mentioned in the health-care literature and my conclusion is that the current management did a good job.

The operating margin [(Total operating revenue - operating expenses)/Total operating revenue)] increased from a negative 36.1% to 4.24% in 1993, indicating a constant progress. The gross margin also had an excellent evolution, from -30.24% in 1990 to 4.81% in 1993.

The return on equity ratio is probably the most impressive indicator, considering the relation to the difference between its value in 1993 and the one in 1990. It went from -69.62% to a staggering 14.88% in only 3 years. The values recorded in 1993 exceed even the national averages, which is great for a hospital with important financial problems just a few years before.

As far as liquidity is concerned, the current ratio is the most frequently used indicator. Its value rose steadily from 1.31 to 1.68, which shows a progress. The acid and quick ratios are not very relevant, but they have also registered minor improvements. The values are still behind the national averages, but the difference is not that great and in a few years time the situation should improve.

The total asset turnover is considered the most important efficiency (activity) indicator. The Current Asset Turnover and the Fixed Asset Turnover are also significant but are less frequently used in the literature. As far as the management of St. Mary is concerned, it did a pretty good job by keeping these indicators above the national averages. The efficiency indicators recorded constant values along the years, although the value recorded in 1993 is lower than the one in 1992, which may indicate a problem.