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Ratio Analysys

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Liquidity Ratio: describe a firm or facility’s capability to pay their currents obligation. It relays the entity availability of cash and other assets to cover accounts payable, short-term debt, and other liabilities. (Finker 2007). Most firms or companies whether new or established need to have a certain amount of liquidity on hand to pay their bills on time. The two most common ratio used to measure liquidity are current ratio and quick ratio.
Current Ratio = current assets / current liabilities
BH current ratio for 2012 = 675426 /195179 = 3.4
BH current ratio for 2013 = 698812 / 178421 = 3.9 The result of the ratio compared for 2012 and 2013 shows Broward health had a steady flow cash and will be able to meet their obligations on time. Factors that can affect these results are time of the season for admissions, patient volume, and the amount of inventories, the economy and sales.
Quick ratio measure liquidity gives the entity a more rigorous measure of available cash on hand and ability to pay current liabilities. A quick ratio of one to one means the entity can pay its bills without selling its inventory. Quick ratio can be measured using current Asset minus inventories over current liabilities.
Quick ratio = current assets – inventory / current liabilities
(BH) Current Asset for 2012 = $ 675,426 - $24,276 / $195,179 = 3.3
(BH) Current Asset for 2013 = $698,812 -$23,359 / $178,421 = 3.7
According to the results of the quick ratio between 2012 and 2013,) means that Broward health had an increase in ratio. Therefore, Broward Health is financially secure and can operate and pay their bills for a while without selling their inventories. Factors that can affect the result of quick ratio are payments and collections, bad debts, and sale of inventories. Solvency ratio: According to (Finker 2007) measures the entity capability to meet its payment obligation

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