Read this week’s assigned chapters, 13 13, 14, 15, as well as the Comprehensive Assessment of Firm Financial Performance Using Financial Ratios and Linguistics Analysis of Annual Reports (Links to an external site.) article and the Financial Ratios (Links to an external site.) web page. Also utilize Appendices 13A, 13B, 13C, and 33A as well as Dr. Smith and Dr. Brown’s financial statements Download Dr. Smith and Dr. Brown’s financial statements.
As the Practice Manager, you will be utilizing Dr. Smith and Dr. Brown’s Physician Practice financial statements for completing the financial ratio calculations below to determine the feasibility of a capital expenditure.
Part 1: Calculations of Financial Ratios
Calculate the financial ratios for Dr. Smith and Brown’s physician practice to analyze the financial viability of the organization.
Identify the type of ratio for each of the following:
Current ratio
Quick ratio
Debt Service Coverage ratio (DSCR)
Operating Margin
Return on Total Assets (ROTA)
Part 2: Type of Ratios
Define the type of ratios used in determining the financial viability of an organization.
Liquidity
Solvency
Profitability
Part 3: Operating Ratios
Define the financial ratios utilized to determine the financial status of Dr. Smith and Brown’s physician practice.
Compare the results in Part 1 with the median to determine the value associated with the financial ratio.
Analyze the results calculated in Part 1 and explain what the calculated result tells you about the financial health of Dr. Smith and Dr. Brown’s physician practice
Part 4: Capital Budgeting Expenditures – Time Value of Money Calculations
Calculate each of the operational ratios for Dr. Smith and Dr. Brown’s physician practice.
Present Value
Internal Rate of Return
Part 5: Evaluation of Capital Expenditures
Define the time value of money.
Provide a real-world example for the time value of money.
Explain why time is an important factor when considering a capital expenditure.
After review of the Dr. Smith and Dr. Brown’s financial statements Download Dr. Smith and Dr. Brown’s financial statements and ratios, analyze the feasibility that the Capital Expenditure listed above would benefit Dr. Smith and Dr. Brown’s practice.
Explain your rationale on whether you would recommend the purchase of the capital expenditures identified. Include any positive or negative aspects of regulatory or government mandates that were considered in making the decision to purchase the capital expenditures.
