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Understanding financial ratios can aid a health care organization’s credit analysis. Financial ratios should be compared to other types of financial data within the organization. Financial ratios are calculated using values from the balance sheet, income statement, and statement of cash flows.

Ratios can be classified as follows:

Liquidity ratios indicate whether a health care organization is able to meet its financial obligations.
Are there any assets or cash on hand to pay the bills?
Solvency ratios indicate whether a company has the resources to meet its long-term obligations.
How liquid is the agency?
Profitability ratios indicate whether operating revenue exceeds operating expenses.
How well does the medical center manage its assets and expenses?
Calculate ratios using the data/information provided below.

To calculate the requested financial ratios, use the financial reports listed below. Provide a brief (1–2 sentence) explanation of the


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