Selected Financial Ratios 1 Liquidity Ratios The purpose of liquidity ratios is to measure the facility’s ability to pay its bills. 1a Current Ratio: The Current Ratio is used to measure a facility’s ability to meet its current liabilities out of current assets. Note : Current assets that are pledged to secure long-term liabilities should not be used when calculating Current Ratio. It is the ratio of current assets divided by current liabilities. Detail can be located on the facility's Balance Sheet. The Department recognizes it may be difficult for facilities which are hospital based to obtain this information specific to the nursing home. Therefore, for the nursing homes which are hospital based, please provide the information for this ratio for Current Assets Current Liabilities = Current Ratio
A current ratio of 1.5 to 2.0 is usually viewed as appropriate. 1b Age of Plant Ratio: The Age of Plant ratio measures facility’s performance of keeping a modern, up-to-date facility and equipment. It is the accumulated depreciation for property, plant and equipment divided by current year depreciation. Detail can be located on facility's Balance Sheet and the Statement of Operations. The Department recognizes it may be difficult for the facilities which are hospital based to obtain this information specific to the nursing home. For the nursing homes that are hospital based please use the excel worksheet found on the tab labeled STEP DOWN. (Instructions for use of the Stepdown are on the Instructions Accumulated Depreciation - PPE Depreciation A lower number is desirable. = Age of Plant
1c
Days in Resident Accounts Receivable: The Days in Resident Accounts Receivable computes the average collection time of resident receivables. It is the net receivables divided by the average daily net resident service revenue. Net Resident Accounts Receivable is Accounts Receivable less allowance for Doubtful Accounts. Detail can be located on facility's Balance Sheet. Net Resident Service Revenue includes all Room and Ancillary Revenue less Contractual Adjustments. Detail can be located on facility's Statement of Operations. Net Resident Accounts Receivable = Net Resident Service Revenue / 365 Days in Accounts Receivable
A higher number indicates that the facility is not doing a good job in converting accounts receivable into cash on a timely basis. 2) Leverage Ratios Leverage ratios measure the facility’s ability to meet its long term obligations. 2a) Debt Service Coverage Ratio: The Debt Service Coverage Ratio measures the total debt service (principal and interest) coverage from cash flow. It is the sum of net revenue (expenses) + depreciation + interest expense divided by the sum of the principal payments + interest. Detail can be located on the facility's Statement of Operations for net revenue, depreciation and interest expense; principal payments can be located on the Balance Sheet with the amount of payments being the difference between beginning and ending balances. The Department recognizes it may be difficult for the facilities which are hospital based to obtain this information specific to the nursing home. For the nursing homes that are hospital based please use the excel worksheet found on the tab labeled STEP DOWN. (Instructions for use of the Stepdown are on the Instructions tab of the excel worksheet.) Net Revenue (Expense) + Depreciation + Interest = Debt Service Coverage Ratio Principal Payments + Interest Typically, a ratio in excess of 2.0 is expected for good credit rating.
3
Efficiency Ratios Efficiency ratios compute the effectiveness of the facility to produce a profit. 3a Return on Total Assets: The Return on Total Assets measures the profits generated by the total assets of the facility. The return on assets indicates the productive utilization of business resources. It is Net Revenue (Expense) divided by total assets. Detail can be located on the facility's Statement of Operations and Balance Sheet. The Department recognizes it may be difficult for facilities which are hospital based to obtain this information specific to the nursing home. Therefore, for the nursing homes which are hospital based, please provide the information for this ratio for your entire operation. Net Revenue (Expense) Total Assets = Return on Total Assets
This is a summary indicator of profitability. Also, Net Equity can be substituted for Total Assets to measure profitability on equity. 3b Operating Margin Ratio The Operating Margin Ratio measures the portion of operating revenue retained as income from operations. It is Net Revenue (Expense) divided by Total Operating Revenue. Net Revenue excludes investment income and other non-operating activities and includes Contractual Adjustments. The details can be located on the facility’s Statement of Operations. Net Revenue (Expense) Total Operating Revenue = Operating Margin Ratio
This is a summary indicator of profitability of the operations of the facility.
Financial Ratio's Worksheet
Center Fiscal Year End Selected Financial Ratios
Liquidity Ratios Current Ratio: (Current Assets / Current Liabilities) a b Current Assets Current Liablilites
a / b
Age of Plant Ratio: (Accumulated Depreciation-PPE / Depreciation) a Accumulated Depreciation Land Impr, Building, Fixed Equip $ Equipment, Furniture & Vehicles $ $ Depreciation Land Impr, Building, Fixed Equip $ Equipment, Furniture & Vehicles $ $
a / b
-
b
Days in Resident Accounts Receivable: (Net Resident A/R / (Net Resident Service Revenue / 365)) Nursing Facility Accounts Receivable Accounts Receivable Less: Allowance Accounts Net Accounts Receivable Nursing Facility Revenue Gross Resident Revenue Less: Contractual Adjustments Net Revenue
c / ( f / 365 )
a b c
(show as negative number)
$
-
d e f
(show as negative number)
$
-
Center Fiscal Year End Leverage Ratios Debt Service Coverage Ratio: (Net Operating Income (Loss) + Depreciation + Interest Expense / (Principal Payments + Interest)) Nursing Facility Gross Resident Revenue Less: Contractual Adjustments Net Revenue Operating Expense Net Operating Income (Loss) Depreciation Expense Interest Expense Payments Principal Interest
(e+f+g) / h
a b c d e f g h
$ $ $
-
$ $
-
$ $
-
Efficiency Ratios Return on Total Assets: (Net Operating Income(Loss) / Total Assets) a b Net Operating Income (Loss) Total Assets $
a / b -
Operating Margin Ratio: (Net Operating Income (Loss) / Total Operating Revenue) a b Net Operating Income (Loss) Net Resident Revenue $ $
a / b -
ee018a0c-7f37-4765-869f-a9c04130d4be.xls
Medicare Cost Report Information 0 WORKSHEET B January 0, 1900 Capital Cost - Movable Eq. --------------------------------------DEPARTMENT --------------------------------------Capital Cost - Building Capital Cost - Movable Eq. Empl Ben & Human Res Adm & Gen'l Maintenance & Repairs Oper of Plant Laundry Housekeeping Dietary Cafeteria Maintenance of Personnel Nursing Adm Central Services and Supply Pharmacy Medical Records Social Services Other (specify) Nonphysician Anest Hospital Skilled Nursing Facility Other Long Term Care Ancillary Service Costs Outpatient Service Costs Special Purpose Costs Special Purpose Costs Nonreimbursable Costs TOTAL
3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 34 36
DIRECT COST -------0
-------0 ========
A Cap. Cost Building -------0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -------0 ========
B Cap. Cost Mov. Equip. -------0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
C Employee Benefits -------0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
D Adm & Gen'l --------
E Maint & Repairs --------
F Op of Plant --------
G Laundry --------
H House keeping --------
I Dietary ---------
J Cafeteria ---------
K Maint of Personnel ---------
L Nursing Adm ---------
M Central Servcies ---------
N CRNA --------
TOTAL --------
-------0 ========
-------0 ========
-------0 ========
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-------0 ========
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-------0 ========
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-------0 ========
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-------0 ========
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-------0 ========
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-------0 ========
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-------0 ========
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-------0 ========
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-------0 ========
0 0 0 0 0 0 0 0 0 0 0 0 0 0
-------0 ========
0 0 0 0 0 0 0 0 0 0 0 0 0
-------0 ========
0 0 0 0 0 0 0 0 0 0 0 0
-------0 ========
0 0 0 0 0 0 0 0 0 0 0
-------0 ========
0 0 0 0 0 0 0 0 0 0
-------0 ========
0 0 0 0 0 0 0 0 0
-------0 ========
0 0 0 0 0 0 0 0
STEPDOWN
Instructions for Step Down Worksheet
PLEASE NOTE: THE COST REPORT PREPARER MAY NEED TO PROVIDE THESE AMOUNTS . Capital Asset Information (1) (2) (3) (4) Record depreciation reported on W/S A, lines 3 and 4, of the Medicare cost report. List the amounts in the appropriate lines on the spreadsheet. Record the related accumulated depreciation to the depreciation reported in the first step. Depreciation expense may be reported on other lines besides W/S A, lines 3 & 4, of the Medicare cost report. Please record any depreciation expense that is not included on W/S A, lines 3 or 4, but is directly identified or reclassified (A-6) to line 34. You may need to contact your cost report preparer to If depreciation expense is reported on W/S A, line 34, of the Medicare cost report, the related accumulated depreciation needs to be identified. Record the accumulated depreciation related to the depreciation expense here. You may need to contact your cost report preparer to determine this.
Long Term Debt Information (5) (6) (7) (8) Record interest and amortization of financing costs reported on W/S A, lines 3 and 4, of the Medicare cost report. List the amounts in the appropriate lines on the spreadsheet. Record the related principal payments of the debt's interest expense reported in the first step. Interest and amortization of financing costs may be reported on other lines besides W/S A, lines 3 & 4, of the Medicare cost report. Please record any expense that is not included on W/S A, lines 3 or 4, but is directly identified or reclassified (A-6) to line 34. You may need to contact your cost report If interest and amortization expense is reported on W/S A, line 34, of the Medicare cost report, the related principal payments of the debt needs to be identified. Record the principal payments related to the interest and amortization expense here. You may need to contact your cost report preparer to
Medicare Cost Report Information Refer to Worksheet B, Part I and Worksheet B-1 of the Medicare cost report. Worksheet B Part I (9) From Worksheet B, Part I, Report the amounts from column 0 - Net Expenses for Cost Allocation to the appropriate line highlighted in yellow. Amounts will be summarized as described below on the spreadsheet. Worksheet B-1 (10) From Worksheet B-1, Report the statistics in the proper columns on the spreadsheet. Amounts will be summarized in the same manner as the amounts are summarized for the Worksheet B, Part I entries.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59
0100 0200 0300 0400 0500 0600 0700 0800 0900 1000 1100 1200 1300 1400 1500 1600 1700 1800 2000 2100 2200 2300 2400 2500 2600 2700 2800 2900 3100 3300 3400 3500 3600 3700 3800 3900 4000 4100 4200 4300 4400 4500 4600 4700 4800 4900 5000 5100 5200 5300 5400 5500 5600 5700 5800
GENERAL SERVICE COST CENTERS Old Capital Related Costs-Buildings and Fixtures Old Capital Related Costs-Movable Equipment New Capital Related Costs-Buildings and Fixtures New Capital Related Costs-Movable Equipment Employee Benefits Administrative and General Maintenance and Repairs Operation of Plant Laundry and Linen Service Housekeeping Dietary Cafeteria Maintenance of Personnel Nursing Administration Central Services and Supply Pharmacy Medical Records & Medical Records Library Social Service Other General Service (specify) Nonphysician Anesthetists Nursing School Intern & Res. Service-Salary & Fringes (Approved) Intern & Res. Other Program Costs (Approved) Paramedical Ed. Program (specify) INPATIENT ROUTINE SERVICE COST CENTERS Adults and Pediatrics (General Routine Care) Intensive Care Unit Coronary Care Unit Burn Intensive Care Unit Surgical Intensive Care Unit Other Special Care (specify) Subprovider (specify) Nursery Skilled Nursing Facility Nursing Facility Other Long Term Care ANCILLARY SERVICE COST CENTERS Operating Room Recovery Room Delivery Room and Labor Room Anesthesiology Radiology-Diagnostic Radiology-Therapeutic Radioisotope Laboratory PBP Clinical Laboratory Services-Program Only Whole Blood & Packed Red Blood Cells Blood Storing, Processing, & Trans. Intravenous Therapy Respiratory Therapy Physical Therapy Occupational Therapy Speech Pathology Electrocardiology Electroencephalography Medical Supplies Charged to Patients Drugs Charged to Patients Renal Dialysis ASC (Non-Distinct Part) Other Ancillary (specify)
Worksheet B, Part I Column 0 Report these amounts on assigned lines of the spreadsheet 191,000 181,000 748,000 950,000 348,000 79,000 116,000 401,000 67,000 133,000 Please disregard any lines from the Medicare Cost Report that are not listed here.
Not Used on spreadsheet, do not enter costs.
517,000 Report these amounts on the Hospital line of the spreadsheet.
1,335,000
Report these amounts on the Nursing Facility line of the spreadsheet. Total and report these amounts as Ancillary Service Costs on the spreadsheet
53,000 2,000 257,000 471,000
216,000 62,000 59,000 138,000 20,000
OUTPATIENT SERVICE COST CENTERS 60 6000 Clinic 61 6100 Emergency 62 6200 Observation Beds 63 Other Outpatient Service (specify) OTHER REIMBURSABLE COST CENTERS 64 6400 Home Program Dialysis 65 6500 Ambulance Services 66 6600 Durable Medical Equipment-Rented 67 6700 Durable Medical Equipment-Sold 68 Other Reimbursable (specify) 69 Outpatient Rehabilitation Provider (specify) 70 7000 Intern-Resident Service (not appvd. tchng. prgm.) 71 7100 Home Health Agency SPECIAL PURPOSE COST CENTERS 82 8200 Lung Acquisition 83 8300 Kidney Acquisition 84 8400 Liver Acquisition 85 8500 Heart Acquisition 86 Other Organ Acquisition (specify) 88 8800 Interest Expense 89 8900 Utilization Review-SNF 90 9000 Other Capital-Related Costs (see instructions) 92 9200 Ambulatory Surgical Center (Distinct Part) 93 9300 Hospice 94 Other Special Purpose (specify) 95 SUBTOTALS (sum of lines 1-94) NONREIMBURSABLE COST CENTERS 96 9600 Gift, Flower, Coffee Shop, & Canteen 97 9700 Research 98 9800 Physicians' Private Offices 99 9900 Nonpaid Workers 100 Other Nonreimbursable (specify) 101 TOTAL (sum of lines 95-100)
30,000 160,000
Total and report these amounts as Outpatient Service Costs on the spreadsheet
Total and report these amounts as Other Reimbursable Costs on the spreadsheet
Total and report these amounts as Special Purpose Costs on the spreadsheet
4,000
Total and report these amounts as Nonreimbursable Costs on the spreadsheet
950,000