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Essay / Health Care Organization Solvency Ratios - 1848
Finally, total asset turnover compares total operating revenue to total assets. The process implies that the more revenue an organization can generate per dollar of assets, the more efficient it is, all else being equal (Finkler, SA, Ward, DM & Calabrese, ID, 2013). Additionally, by dividing the year's income amount by total assets, the ratio will show the amount of income for each asset amount. This ratio method is also useful and can help determine the cause and if there are ways to use assets more efficiently and generate more income. Solvency RatioRisk in a healthcare organization is the primary objective of the healthcare organization through frugal pursuit of solvency ratios. The goal of solvency ratios is to take a long-term view. Additionally, it is to help determine whether the organization has exceeded its limits in using financial leverage. Sometimes these ratios may be called leverage or capital structure ratios. Three common types of solvency ratios are “interest coverage ratio, debt service coverage ratio, and “long-term debt to net assets ratio.” They all compare one item to another and determine if there is a risk. Nevertheless, the solvency ratios have been useful and attention should be paid to their improvement. From the perspective of the creditor and the organization, it varies whether the organization needs to improve its risks and profits. If charity care contributes to expenses but hurts profits, the overall interest coverage rate would be lower. The debt service coverage ratio aims to establish an interest coverage ratio and provide a more complete picture of the organization's ability to pay its debt over the long term. The process requires extracting information from the income statement and middle of paper ...... s combination of useful ways to compare, determine and measure profits, your own hospital and other organizations. The equations and calculations are created with the aim of enabling organizations and management to use business situation and profit growth. Accounts receivable are complex, but are created to have a revenue cycle and make payments. The revenue cycle is a methodical process used in most organizations for planning, transforming revenue into cash, and solving problems. Banking relationships are always necessary if the organization allows it, and banks are always available to help run an organization. It is clear that many tools and resources are available to help management run their organization smoothly, as obstacles can arise when problems arise. Accounting ratios and equations are useful in helping organizations determine the overall picture of their growth..