Question

The following information is available for the Mercy Hospital:

		For year ending
		December 31 2019		December 31, 2018
Revenue
Net Patient Revenue		$14,500,000.00		$3,165,000.00
Operating Expenses
Medical/surgical	$1,500,000.00		$1,000,000.00
Wages	$1,200,000.00		$ 500,000.00
Purchasing	$    350,000.00		$ 120,000.00
Pharmacy	$1,650,000.00		$1,250,000.00
Professional Fees	$3,400,000.00		$2,650,000.00
Interest	$   750,000.00		$ 525,000.00
Revenue in Excess of Expense/(Loss)	??????		??????

Analyze this statement of operations and write a paragraph on what you perceive to be the strengths and weaknesses of Mercy Hospital. There are no mistakes in the above example.

Answer 1

		For year ending
			31-Dec		31-Dec-18
			2019
	Revenue
	Net Patient Revenue		$14,500,000.00		$3,165,000.00
		A	B=A/14500000	C	D=C/3165000
	Operating Expenses		Percentage of Net Patient Revenue		Percentage of Net Patient Revenue
	Medical/surgical	$1,500,000.00	10%	$1,000,000.00	32%
	Wages	$1,200,000.00	8%	$500,000.00	16%
	Purchasing	$350,000.00	2%	$120,000.00	4%
	Pharmacy	$1,650,000.00	11%	$1,250,000.00	39%
	Professional Fees	$3,400,000.00	23%	$2,650,000.00	84%
	Interest	$750,000.00	5%	$525,000.00	17%
	Total Expenses	$8,850,000	61%	$6,045,000	191%
	Revenue in Excess of Expense/(Loss)	$5,650,000.00	39%	($2,880,000.00)	-91%
ANALYSIS:
Compared to net loss of $2.88 million in 2018, there is net profit of $5.65 million in 2019
Net Patient Revenue increased in 2019
Wages cost was 16% of revenue in 2018. It was reduced to 8% in 2019
Interest cost was reduced from 17% of revenue to 5% in 2019