Baldwin General is a hospital in the Summerdale metropolitan area that has seen a decline in revenues and investors backing out of its proposed new surgical wing. Consider the following data, and perform a DuPont analysis of the hospital:
Net Income $1,218
Total Equity $2,118
Total Revenues $28,613
Total Assets $9,869
Across town, Creek Park Hospital is performing well and just completed two additions to serve more patients. Consider the following DuPont analysis of Creek Park:
Creek Park ROE = Total margin x Total asset turnover x Equity multiplier = 3.8% x 2.1 x 3.2
Perform a comparative analysis of Baldwin and Creek Park, and explain what issues you think Baldwin is experiencing in expenses, total asset turnover, and financial leverage. In your financial statement analysis, explain what steps you think Baldwin should take to improve its financial condition.
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