St. Mary Financial Operating Indicator Analysis Report

¶ … financial analysis we need to consider. First of all, an overview of the main financial ratio, with their meaning and a keen evaluation of their score. Second of all, a progressive analysis, which would refer to the way these financial ratios have evolved in the four-year period we are looking at. The latter will allows us to draw relevant conclusions as to the performance of the management team. The profitability ratios are best to show how well the company is actually performing. If we look at St.

Mary's profitability indicators, all three of them have shown remarkable progress in the last four years and all of them have positive figures in the present. The return on equity indicator, for example, estimates the return rate for the stockholders. While ROE was - 69.92% in 1990, which meant that the stockholders were retrieving much less than they had invested, in 1993, ROE raised to 14.88%. Additionally, the ROE is twice the national benchmark (7.03% in 1993). The liquidity ratios show how able the company is to respect its short-term financial obligations.

Calculated by dividing current assets to current liabilities, the current ratio in St. Mary's case followed an ascending trend between 1990 and 1993, never ranking below the critical 1 figure. We can assume from this analysis that the management team, although not pressured by liquidity constraints, took a prudent drive towards consolidating a sound short-term financial situation. If we look at the national benchmark, this decision appears justified, since the industry average ranks over 2.0.

The efficiency indicators include asset management ratios that help us determine the efficiency with which the company is using its assets. The fixed-assets turnover, for example, shows us how efficient the company is in using its equipment. Between 1990 and 1993, St. Mary's fixed-assets turnover almost doubled and is currently almost three times the national benchmark. Together with the total-asset turnover (twice the national benchmark, 1.99 compared to 1.01), the fixed-assets turnover shows that the St. Mary is using its fixed-assets resources far more efficiently than most of the hospitals.

Finally, we need to give out an evaluation of the debt ratios, which will show whether the hospital is relying too much on credit to finance its actions. The debt ratio, calculated as total debts divided by total assets, has not significantly changed over the analyzed period and shows that the hospital continues to rely less on credit to finance its activities and more on other sources of financing. On the other hand, other hospitals have debt ratios close to 50%, which, compared to St.

Mary's 35.8% in 1993, is quite a significant difference. The conclusions that can be.