The Following Financial Statements For BestCare HMO

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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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