The River Community Hospital:
1. Examine the hospital’s statements of cash flows. What information do they provide regarding the hospital’s sources and uses of cash over the past four years?
2. Use the Du Pont equation to obtain a rough feel for the financial condition of the hospital. What are your conclusions?
3. Conduct a financial statement ratio analysis on the hospital and interpret the resulting data.
4. Conduct an operating indicator analysis on the hospital and interpret the resulting data. (Hint: In the absence of specific information concerning the deductibles for inpatient and outpatient gross revenues, apply the aggregate deductible to each source of patient revenue.
5. List the hospital’s financial and operating strengths and weaknesses as identified in your analysis thus far.
6. On the basis of the limited amount of information provided in the case, what are your recommendations to the board to correct any weaknesses noted?
7. This analysis focused on Du Pont and ratio analysis. What are some other techniques that can be used in financial statement analysis?
8. What additional information would be useful in the analysis?
9. What are the major problems that one encounters in performing financial statement and operating indicator analyses?
10. Finally, construct both financial and operating indicator dashboards that will be used to present key performance indicators (KPIs) at future board meetings.