: Designing a Training Program
11/09/2019
finance project Supplemental User’s Guide
11/09/2019

COMPUTING RATIOS FROM BALANCE SHEET

Listed below are the balance sheet and statement of operations for Wynn Memorial Nursing Home for 2008 and 2009.

1. Compute Wynn Memorial Nursing Home’s current ratio.

2. Compute Wynn Memorial Nursing Home’s acid (or acid-test) ratio.

3. Compute Wynn Memorial Nursing Home’s days in accounts receivable.

4. Compute Wynn Memorial Nursing Home’s average payment period.

5. Compute Wynn Memorial Nursing Home’s long-term debt to net assets ratio.

6. Compute Wynn Memorial Nursing Home’s net assets to total assets ratio.

7. Compute Wynn Memorial Nursing Home’s total asset turnover ratio.

8. Compute Wynn Memorial Nursing Home’s fixed asset turnover ratio.

9. Compute Wynn Memorial Nursing Home’s return on total assets.

10. Compute Wynn Memorial Nursing Home’s operating margin.

Listed below are the industry standards of the above ratios for Wynn Memorial’s peer group. Use this information as you answer problems 11 to 14.

 

Nursing Home Financial Ratios–Industry Median
Current ratio 1.98
Acid test ratio 0.20
Days in accts receivable 67.19
Average payment period 56.13
Total asset turnover 1.02
Fixed asset turnover 2.20
Operating margin 0.02
Return on total assets 0.04
Long-term debt to net assets 0.62
Net assets to total assets 0.53

11. Comment on Wynn Memorial’s liquidity. Cite at least one meaningful ratio to support your observations.

12. Comment on Wynn Memorial’s efficiency in its use of assets. Cite at least one meaningful ratio to support your observations.

13. Comment on Wynn Memorial’s profitability. Cite at least one meaningful ratio to support your observations.

14. Comment on Wynn Memorial’s capital structure. Cite at least one meaningful ratio to support your observations.

Be sure to answer each question thoroughly and include citations of outside sources where appropriate.

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