Financial Ratio Analysis in Healthcare

Financial ratio analysis involves calculating and interpreting key metrics to evaluate a healthcare organisation's performance, liquidity, solvency, efficiency, and profitability. This topic covers liquidity ratios (current ratio, quick ratio), profitability ratios (net profit margin, return on assets), efficiency ratios (asset turnover, inventory turnover), and leverage ratios (debt-to-equity). For Zambian university and college students in health management and finance, ratio analysis is a vital tool for benchmarking, trend analysis, and comparative assessment against industry peers. It supports strategic decisions on cost control, funding, and investment. Applying these ratios in the Zambian health context—considering public funding constraints and donor dependencies—enables graduates to diagnose financial health, communicate with stakeholders, and drive improvements in hospital and clinic management.