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Financial Ratios Analysis and Comparison Paper - Essay Example

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The financial ratios calculated from the financial statements of the organization helps to determine the liquidity, profitability and…
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Financial Ratios Analysis and Comparison Paper
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Download file to see previous pages The financial ratios for Universal Health Services have been calculated for the last three years which helps to understand the performance trend of the health care organization. The current ratio and the quick ratio that has been calculated determine the liquidity of Universal Health Services. The return on assets and the return on equity determine the profitability of the organization. The debt equity ratio determines the level of debt incurred by the healthcare group as compared to the equity of the organization. The fixed asset turnover ratio determines the operating performance of the company.
The level of liquidity of the group has decreased in a compounded fashion in the last three years and the level of inventory has also increased. The profitability of the healthcare group has increased in a compounded fashion in the last three years. Universal Health Services have been able to reduce the level of debt as compared to the level of equity (Yahoo finance, 2013). The operating performance of UHS has improved as the fixed assets of the organization have been able to generate more revenues.
The financial ratios for Universal Health Services (UHS) have been compared with that of another health care organization namely Health Management Associates (HMA). The comparative ratio analysis for the two organizations has been provided for the last three years in order to compare the performance of the organization as compared to the national norms. UHS has maintained a steady level of liquidity over the last three years as compared to MHA. This is evident from the comparative figures of the current ratio. The quick ratio of the two organizations could be compared over the last three years to understand that UHS has been able to manage its inventory better than MHA. The quick ratio for MHA has declined over the years which mean that the inventory level has risen in the last three years.
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