17.4
Financial Statement for Best Care HMO (not-for-profit MCO)
BestCare HMO Statement of Operations and Change in Net Assets, Year Ended June 30,2015 (in thousands)
						Revenue:
Premiums earned				$26,682
Coinsurance				1,689
Interest and other income				242
Total revenues				$28,613
Expenses:
Salaries and benefits				$15,154
Medical supplies and drugs				7,507
Insurance				3,963
Provision for bad debts				19
Depreciation				367
Interest and other income				385
Total expenses				$27,395
Net income				$1,218
Net assets, beginning of year				$900
Net assests, end of year				$1,218
BestCare HMO Balance Sheet, June 30, 2015 (in thousands)
Assets:
Cash and cash equivalents				$2,737
Net premiums receivable				821
Supplies				387
Total current assets				$3,945
Net property and equipment				$5,924
Total assets				$9,869
Liabilities and Net Assets:
Accounts payable- medical services				$2,145
Accrued expenses				$929
Notes payable				$141
Current portion of long-term debt				$241
Total current liabilities				$3,456
Long-term debt				$4,295
Total liabilites				$7,751
Net assets (equity)				$2,118
Total liabilites and net assets				$9,869
a. Perform a Du Pont analysis on BestCare. Assume that the industry average ratios are as follows:
						Total margin			3.80%
Total asset turnover			2.10%
Equity multiplier			3.20%
Return on equity (ROE)			25.50%
b. Calculate and interpret the following ratios for Best Care:
			Industry Average
Return on asset (ROA)			8.00%
Current ratio			1.3
Days cash on hand			41 days
Average collection period			7 days
Debt ratio			69%
Debt-to-equity ratio			2.2
Times interest earned (TIE) ratio			2.8
Fixed asset turnover ratio			5.2