Consider this income statement:

a. How does this income statement differ from the ones presented in Table 11.1 and Problem 11.2?

b. Why does Green Valley show a provision for income taxes while the other two income statements did not?

c. What is Green Valley’s total (profit) margin? How does this value compare with the values for Park Ridge Homecare Clinic and BestCare?

d. The before-tax profit margin for Green Valley is operating income divided by total revenues. Calculate Green Valley’s before-tax profit margin.Why may this be a better measure of expense control when comparing an investor-owned business with a not-for-profit business?

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Green Valley Nursing Home, Inc. Statement of Income Year Ended December 31, 2008 Revenue: Resident services revenue $3,163,258 Other revenue 106,146 Total revenues $3,269,404 Expenses: Salaries and benefits $1,515,438 Medical supplies and drugs 966,781 Insurance and other 296,357 Provision for bad debts 110,000 85,000 Depreciation Interest Total expenses Operating income Provision for income taxes Net income 206,780 $3,180,356 $ 89,048 31,167 $ 57,881