1. The problems below are based on the following simplified financial statements for BCD Health Services:

BCD Health Services

Statement of Cash Flows

For the Fiscal Years Ending June 30, 2015 and 2016

2016 2015

Cash flows from operating activities

Collections from patients and third-party payers $21,000 $16,000

Collections from other operating activities 2,000 1,400

Payments to suppliers (1,700) (800)

Interest payments (2,000) (2,000)

Payments to employees (15,100) (12,500)

Net cash from operating activities $ 4,200 $ 2,100

Cash flows from investing activities

Purchase new equipment $ (3,000) $ 0

Purchase marketable securities (200) 0

Increase in sinking fund (200) (200)

Net cash from investing activities $ (3,400) $ (200)

Cash flows from financing activities

Payments of mortgage principal $ (2,000) $ (1,800)

New mortgage 1,200 0

Net cash used for financing activities $ (800) $ (1,800)

Net increase/(decrease) in cash $ 0 $ 100

Cash, beginning of year 500 400

Cash, end of year $ 500 $ 500

BCD Health Services

Statement of Financial Position

As of June 30, 2015 and 2016

ASSETS 2016 2015

Current

Cash $ 500 $ 500

Marketable securities 400 200

Accounts receivable, net of $400

and $300 allowance for bad debts 3,000 2,000

Inventory 1,000 500

Prepaid assets 100 100

Total current assets $5,000 $3,300

Fixed

Property, plant, and equipment $43,000 $40,000

Less accumulated depreciation 17,800 16,000

Net property, plant, and equipment $25,200 $24,000

Sinking fund 1,800 1,600

Investments 300 300

Total fixed assets $27,300 $25,900

Total $32,300 $29,200

EQUITIES

Current liabilities

Wages payable $700 $500

Accounts payable 700 1,000

Notes payable 500 500

Deferred revenue 300 300

Taxes payable 100 100

Total current liabilities $ 2,300 $ 2,400

Long-term liabilities

Mortgage payable $ 4,200 $ 5,000

Bonds payable 20,000 20,000

Total long-term liabilities $24,200 $25,000

Net Assets

Unrestricted net assets $ 5,800 $ 1,800

Total net assets $ 5,800 $ 1,800

Total $32,300 $29,200

BCD Health Services

Statement of Operations

For the Fiscal Years Ending June 30, 2015 and 2016

2016 2015

Revenues

Patient revenues $22,000 $17,000

Other operating revenues 2,000 1,400

Total revenues 24,000 $18,400

Expenses

Wages for clinical services $11,000 $9,000

Patient care supplies and food 600 400

Housekeeping services 800 500

Operation and maintenance of plant 1,200 1,000

Administrative services 2,200 2,000

Depreciation and amortization 1,800 1,200

Bad debt expense 400 300

Interest 2,000 2,000

Total expenses 20,000 $16,400

Increase in unrestricted net assets $ 4,000 $ 2,000

Using these simplified financial statements for BCD Health Services, complete the following ratios for both 2015 and 2016:

a. Common size cash

b. Common size current liabilities

c. Common size wages for clinical services

d. Current ratio

e. Debt service coverage

f. Plant age

g. Revenue to assets

h. Profit margin

What do these ratios tell you about the financial health of this organization?