Reference no: EM13947917

Problem 1: Brandywine Homecare, a not-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 Brandywine's 2011 income statement.

b. What were Brandywine's 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 Brandywine's net income, total profit margin, and cash flow?

d. Suppose the change had halved, rather than doubled, the firm's de-predation expense. Now, what would be the impact on net income, total profit margin, and cash flow?

Problem 2: Consider the following balance sheet:

BestCare HMO Balance Sheet June 30, 2011 (in thousands)

Assets
Current Assets:
Cash	$2,737
Net premiums receivable	821
Supplies	387
Total current assets	$3,945
Net property and equipment	$5,924
Total assets	$9,869
Total assets	$9,869
Liabilities and Net Assets
Accounts payable-medical
services	$2,145
Accrued expenses	929
Notes payable	382
Total current liabilities	$3,456
Long-term debt	$4,295
Total liabilities	$7,751
Net asters-unrestricted
(equity)	$2,118
Total liabilities and net
assets	$9,869

a. How does this balance sheet differ from the one presented in Exhibit for Sunnyvale?

b. What is BestCare's net working capital for 2011?

c. What is BcstCarc's debt ratio? How dots it compare with Sunnyvalc's debt ratio?

Problem 3: Consider this balance sheet:

Green Valley Nursing Home, Inc.

Balance Sheet December 31, 2011

Assets Current Assets:
Cash	$105,737
Investments	200,000
Net patient accounts receivable	215,600
Supplies	87,655
Total current assets	$608,992
Property and equipment	$2,250,000
Less accumulated depreciation	356,000
Net property and equipment	$1894 000
Total assets	$2,502,992
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable	$72,250
Accrued expenses	192,900
Notes payable	180,000
Total current liabilities	$445,150
Long-term debt	$1700 000
Shareholders' Equity:
Common stock, $10 par value	$100,000
Retained earnings	257,842
Total shareholders' equity	$357,842
Total liabilities and shareholders' equity	$2502 992

a. How does this balance sheet differ from the ones presented in Exhibit and Problem 2?

b. What is Green Valley's net working capital for 2011?

c. What is Green Valley's debt ratio? How does it compare with the debt ratios for Sunnyvale and BestCare?