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17.4 Consider the following financial statements for BestCare HMO, a not-for-profit managed care plan:

17.4 Consider the following financial statements for BestCare HMO, a not-for-profit managed care plan:.

a. Perform a Du Pont analysis on BestCare. Assume that the industry
average ratios are as follows:
Total margin                      3.8%
Total asset turnover           2.1
Equity multiplier                 3.2
Return on equity (ROE)   25.5%
b. Calculate and interpret the following ratios for BestCare:
Industry Average
Return on assets (ROA)          8.0%
Current ratio                              1.3
Days cash on hand                 41days
Average collection period        7days
Debt ratio                                       69%
Debt-to-equity ratio                      2.2
Times interest earned (TIE) ratio 2.8
Fixed asset turnover ratio            5.2
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17.4 Consider the following financial statements for BestCare HMO, a not-for-profit managed care plan:

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