Question

(TCO G) Describe the difference between a financial ratio and an operating indicator.

Answer 1

Financial ratio only tells about the financial health of the organisation but operating indicator goes one step ahead of financial ratio and tells about business's finacial condition, it mainly examine operating variables in order to explain the performance of business.

There are few operating indicators are as follows:

1. profit per discharge: inpatient profit/total ischarge

2. net price per discharge

3. occupancy rate

4. average length of stay

these all are operating indicators which helps in measuring or examinging the performance of business's financial condition. These ratios are different as per industries.