1) Lets say for argument sake that the following is the organization's financial statements. Calculate the ROA and ROE. Based on this information. What does this tell you about the organization financials and how they are using their assets and equity?

IHC has provided you with a partial list of their finances. Although they have confidence in you regarding privacy, they wanted to limit their information to prevent information overload, so they provide you with these accounts and figures.

Income Statement

Revenue:

Patients Care $20,500,000

Governmental Contract Income $11,500,000

Total Revenues $32,000,000

Expenses:

Employee: Salaries $13,300,000

Employee Benefits $ 5,320,000

Rent Expenses $ 120,000

Utilities $ 55,000

Equipment $ 130,000

Maintenance and Repair $ 75,000

Taxes $ 5,000,000

Total expenses $24,000,000

Net Income $ 8,000,000

Balance Sheet

Assets:

Current Assets Cash $ 2,000,000

Accounts Receivable $ 800,000

Inventory $ 1,500,000

Investments $ 2,000,000

Total Current Assets $ 6,300,000

Property and Equipment:

Equipment $ 1,200,000

Total Assets $ 7,500,000

Current Liabilities and Stockholder Equity:

Current Liabilities Accounts Payable $ 1,200,000

Notes Payable $ 1,000,000

Accrued Expenses $ 800,000

Long Term-Debt $ 2,000,000

Total Liabilities $ 5,000,000

Stockholders Equity:

Common Stock $ 1,500,000

Treasury Stock $ 1,000,000

Total Stockholders Equity $ 2,500,000

Total Liabilities and Stockholders $ 7,500,000

Equity