Following is a trial balance (with 000 omitted for simplification) showing the accounts of Beta Hospital at December 31, 2019. Using the information from the trial balance, answer the following questions. Show all calculations.
a. What is number of days' cash on hand?
b. What is the number of days of revenue in net patient accounts receivable?
c. How much is the excess of revenues over expenses?
d. What is the operating margin?
e. What is the long-term debt-to-equity ratio at year-end?
f. What is the interest coverage (times interest earned)?

Question

Quizplus · Accepted Answer

Total expenses other than depreciation: $20,000 + $2,000 + $6,000 + $1,000 + $1,000
= $30,000
Days' cash on hand: $5,000 / ($30,000/365) = 61 days
b. Net patient accounts receivable / Net patient service revenues / day
= $7,000 / ($36,000 / 365) = $7,000 / (98.63)
= 71 days
 11ee3ffc_f3aa_cece_93d2_ad2c26c3b3e9_TBCB1000_00 d. Operating margin =
Net change in fund balance (or excess of revenues over expenses in this problem) / Total revenues + Transfers in
= $2,000 / $36,000 + $0
= 5.56%
e. Long-term bonds payable = $34,000;
Year-end total net assets =
Net assets at beginning of year ($17,300) + Excess of revenues over expenses for the year ($2,000) = $19,300;
Long-term debt to equity ratio = Long-term debt / Total net assets
= $34,000 / $19,300 = 176%
f. Times interest earned =
(Excess of revenues over expenses + Interest expense) / Interest expense
= $3,000 / $1,000
= 3 times

Following Is a Trial Balance (With 000 Omitted for Simplification)