Ca 1 - Principles Of Accounting

: As the new Chief Executive Officer of OHC medical Center , I would energize to father use of the pecuniary information of the organization to assess the monetary health of OHC and sustain important nameinations regarding current and future operations of OHC . Since the present monetary information for 2006 and 2007 of the organizations is a reflection of what happened in the past , I must use the similar to guide the phoner to take to heart attain its objectives especially on the financial aspectTo the do the identical I will have to evaluate first the incontrovertibleness , liquidity and then solvency of the organization using following financial ratios as extracted from the party s financial statements 2006 2007 Net Income 37 ,370 ,000 34 ,177 ,000 16 ,718 ,000Net Profit Margin 0 .64 0 .69Return on Assets 0 .84 0 .69Return on Equity 11 .58 2 .04Current Ratio 1 .51 2 .11Debt to Equity Ratio 12 .77 1 .95 Profitability tells whether the company is earning well in union with expectations and objectives . The medical center appears to be really profitable at the net profit margins of 0 .64 and 0 .69 for the geezerhood 2006 and 2007 on an individual basis . This means that the company is earning much than half(a) of its revenues which if expressed in simple terms could mean that for each ten-dollar revenue , the company is earning 64 cents and 69 cents for the years 2006 and 2007 respective(prenominal)ly , which ar very high . No wonder the legislate on assets reflected 0 .84 and 0 .69 for the years 2006 and 2007 respectively . The same utterance is much evident in the very high return on justness which was reflected at 11 .58 and 2 .04 for the years 2006 and 2007 respective .

In practical terms , investors earn more than eleven times from their 2006 investment while more than reduplicate in 2007The very intelligible positiveness is also obvious in its impact on company s liquidity which was reflected at 1 .51 and 2 .11 for the years 2006 and 2007 respectively . Since liquidity (Helfert , 1994 ) measures the potentiality of the company to meets its currently maturing obligations it goes without saying creditors need not gravel since they have a very low risk in extending credit to the companyThe good impact of the company s profitability (Brigham and Houston ,2002 ) is boost reflected in the company s solvency (Meigs and Meigs , 1995 ) which speaks for the want-term health of the organization A debt to integrity ratio of 12 .7 7 in 2006 which polarityificantly improved to 1 .97 in 2007 could only show a proven soldiery capability and stability of the organizationOn the basis of the company s proven profitability , it whitethorn be concluded that the company is delivering the expectation of owners and managers and other(a) decision makers are expected . An earning company is a sign of sanitary one that could assure the company of its short term and long term...If you want to get a full essay, arrange it on our website: OrderCustomPaper.com

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