Taufiq Azam
FIN 301
October 14, 2012 CASE 2 COMMUNITY GENREAL HOSPITAL
I. INTRODUCTION Community General Hospital was a growing and prosperous not-for profit organization in segregated Virginia from WWII until the abolishment of segregation in the 1960's. At that time they have served and treated the black community, however post-segregation caused for more competition and therefore Community general hospital has undergone various financial problems throughout their existence. Dr. Nolan Wright has been appointed the new manager of the Hospital. However, he has been puzzled by the conditions seen in the financial statements. Over time they had acquired an excessive amount of debt, poor management, budget deficits, and lack of hospital patients. In 1983 the Hospital relocated and changed the name from Whittaker memorial Hospital to Community General Hospital. The fifteen-million dollar bond that was issued and 1.5 million dollar pledges helped Community General Hospital achieve this change. In 1990 the debt increased to twenty-million, this in turn pushed the board of directors to extreme financial measures. The fund deficit increases as the years go by, the reason being short and long-term liabilities.
II. METHODOLOGY
a) Debt Ratio
b) Current Ratio
c) Acid Test Ratio
d) Net Present Value
e) Beta (β)
f) Z-Score
III. SOLUTION
Debt Ratio > Total Debt/Total Assets (1994) = 26,449,071/10,600,209 = 2.50 (1995) = 26,540,410/10,543,410 = 2.52

Current Ratio > Current Assets/Current Liabilities (1994) = 2,696,392/4,477,630 = 0.602 (1995) = 3,065,309/4,538,653 = 0.675

Acid Test Ratio > (Current Assets - Inventory) / Current Liabilities (1994) = (2,696,392- 271997 ) / (4,477,630) = 0.523 (1995) = (3,065,309-2777191)