Universal Health Service Inc. Financial Plan

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Category:
Finance
Subcategory:
Universal Health Service
Level:
Academic
Pages:
7
Words:
1503
View sample
Solution 1 Financial plan The financial plan for an organization is very essential as it shows a comprehensive evaluation of current and future financial state which is used for annual projection of income and expense for a company. There is the different classification of the financial ratio used in financial evaluation which includes profitability, liquidity, asset efficiency, leverage ratios, etc. of which they are differently used based on the aspect of performance as proportion is intended to do (Muennig & Bounthavong, 2016). Profitability ratio focuses on firm ability to generate profit and return on assets and equities measures how management is efficient enough to earn profit from business resources. Liquidity ratio shows the firm’s ability to pay its short-term debt, and it majorly focuses on the firm’s current asset and current liability in the balance sheet. Asset efficiency ratio measures the efficiency in which the company uses its asset to produce sale, shows how frequently firms converts its asset into the sale. Leverage ratio measures the ability to affirm to survive for an extended period or meets its long-term debt obligation. The financial analysts clearly considered current ratio as appropriate for financial analysis. A current ratio is sometimes a current company asset exceed its current liability, which is an indication of solvency of the business. The present ratio of UHS is 1.562 which is higher and therefore indicates a better liquidity and can now settle their short-term bill without any problem for the next three years. The ratio has its limitation it does not simply disclose the liquidity of a firm this can be caused by the different ratio in different parts of the year, and also it’s difficult to compare with other companies hence mostly used in conjunction with other ratios (Muennig & Bounthavong, 2016). However, the financial analysts considered the fact that the other ratios play a crucial role in understanding...
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