Given the following industry average ratios for managed care organizations and nursing homes, explain why the ratios are different between the two industries.
Managed Care Industry Averages:
Total margin - 3.8%
Total asset turnover - 2.1
Equity multiplier - 3.2
Return on equity - 25.5%
Return on assets - 8.0%
Current ratio - 1.3
Days cash on hand - 41 days
Average collection period - 7 days
Debt ratio - 69%
Debt-to-equity ratio - 2.2
Times interest earned ratio - 2.8
Fixed asset turnover ratio - 5.2
Nursing Home Industry Averages:
Total margin - 3.5%
Total asset turnover - 1.5
Equity multiplier - 2.5
Return on equity - 13.1%
Return on assets - 5.2%
Current ratio - 2.0
Days cash on hand - 22 days
Average collection period - 19 days
Debt ratio - 71%
Debt-to-equity ratio - 2.5
Times interest earned ratio - 2.6
Fixed asset turnover ratio - 1.4