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INCOME STATEMENTS ( CHP 3 )

3.1Entries for the Warren Clinic 2011 income statement are listed below in alphabetical order. Reorder the data in proper format.

Bad debt expense Depreciation expense General/administrative expenses Interest expense Interest income Net income Other revenue Patient service revenue Purchased clinic services Salaries and benefits Total revenues Total expenses

$ 40,000 90,000 70,000 20,000 40,000 30,000 10,000 440,000 90,000 150,000 490,000 460,000

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3.2 Consider the following income statement:

Best Care HMO Statement of Operations Year Ended June 30, 2011 (in thousands)

Revenue: Premiums earned Coinsurance Interest and other income

Total revenues

Expenses: Salaries and benefits Medical supplies and drugs Insurance Provision for bad debts Depreciation Interest

Total expenses Net income

$26,682 1,689 242 $28,613

$15,154 7,507 3,963 19 367 385 $27,395 $ 1,218

d. What is BestCare's total profit margin? How can it be interpreted?

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3.3 Consider this income statement:

Green Valley Nursing Home, Inc. Statement of Income Year Ended December 31, 2011

Revenue: Net patient service revenue Other revenue

Total revenues

Expenses: Salaries and benefits Medical supplies and drugs Insurance and other Provision for bad debts Depreciation Interest

Total expenses Operating income

Provision for income taxes Net income

$3,163,258 106,146 $3,269,404

$1,515,438 966,781 296,357 110,000 85,000 206,780 $3,180,356 $ 89,048 31,167 $ 57,881

c. What is Green Valley's total profit margin? How does this value com- pare with the values for Sunnyvale Clinic and BestCare?

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3.4Great Forks Hospital reported net income for 2011 of $2.4 million on total revenues of $30 million. Depreciation expense totaled $1 million. a. What were total expenses for 2011?

b. What were total cash expenses for 2011? (Hint: Assume that all ex- penses, except depreciation, were cash expenses.)

c. What was the hospital's 2011 cash flow?

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1. 4.1 Middleton Clinic had total assets of $500,000 and an equity balance of $350,000 at the end of 2010. One year later, at the end of 2011, the clinic had $575,000 in assets and $380,000 in equity. What was the clinic's dollar growth in assets during 2011, and how was this growth financed?

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1. 4.2 San Mateo Healthcare had an equity balance of $1.38 million at the be- ginning of the year. At the end of the year, its equity balance was $1.98 million. a. Assume that San Mateo is a not-for-profit organization. What was its net income for the period?

Now, assume that San Mateo is an investor-owned business.

Assuming zero dividends, what was San Mateo's net income? Assuming $200,000 in dividends, what was its net income? Assuming $200,000 in dividends and $300,000 in additional stock sales, what was San Mateo's net income?

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What is the FV after 3 years of a $100 lump sum invested at 10%?

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You invest$10,000at age21and earn.

10%per year on the money. How much

will there be at age65?

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