Financial Statements
Assess cost concepts management control processes of budgeting revenue cycle management working capital time value analysis capital budgeting analysis and long-term financing decisions.
Instructions
Solve the following financial problems and submit the answers including your work in a Word or Excel document:
Problem 3.5 from following;
Brandywine Homecare a non-for-profit business had revenues of $12 million in 2011. Expenses other than depreciation totaled 75 percent of revenues and depreciation expense was $1.5 million. All revenues were collected in cash during the year and all expenses other than depreciation were paid in cash.
a) Construct Brandywines 2011 income statement
b) What were Brandywines net income total profit margin and cash flow?
c) Now suppose the company changed its depreciation calculation procedures (still within GAAP) such that its depreciation expense doubled. How would this change affect Brandywines net income total profit margin and cash flow?
d) Suppose the change had halved rather than doubled the firms depreciation expense. Now what would be the impact on net income total profit margin and cash flow?
Problem 4.5 from the following;
Consider the following balance sheet:
BestCare HMO
Balance Sheet
June 30 2011
(in thousands)
Assets
Current Assets:
Cash $2737
Net premiums receivable 821
Supplies __387
Total current assets $3945
Net property and equipment $5924
Total assets $9869
Liability and Net Assets
Account payable medical services $2 145
Accrued expense 929
Notes payable 382
Total current liabilities $3456
Long-term debt $4 295
Total liabilities $7751
Net assets—-unrestricted equity $2118
Total liabilities and net assets $9869
a) How does this balance sheet differ from the one percent in exhibit 4.1 for Sunnyvale?
b) What is BestCares net working capital for 2011?
c) What is BestCares debt ration? How does it compare with Sunnyvales debt ratio?
Problem 4.6 from the following;
Please check the balance sheet for Green Valley Nursing Home Inc. is in the attached file and follow the question below;
a) How does this balance sheet differ from the ones presented in Exhibit 4.1 and problem 4.5?
b) What is Green Valleys net working capital for 2011?
c) What is Green Valleys debt ratio? How does it compare with the debt ratio for Sunnyvale and BestCare?