3.3 Consider this income statement: ST- Green Valley Nursing Home, Inc. Statement of Income Year Ended December 31, 2015 Revenue: Patient service revenue $3,163,258 Less provision for bad debts (110,000) Net patient service revenue $3,053,258 Other revenue 106,146 Net operating revenues $3,159,404 (continued) (continued from previous page) Expenses: Salaries and benefits $1,515,438 Medical supplies and drugs 966,781 Insurance and other 296,357 Depreciation 85,000 Interest 206,780 Total expenses $3,070,356 Operating income $ 89,048 Provision for income taxes 31,167 Net income $ 57,881 a. How does this income statement differ from the ones presented in Exhibit 3.1 and Problem 3.2? b. Why does Green Valley show a provision for income taxes while the other two income statements do not? c. What is Green Valley's total profit margin? How does this value compare with the values for Sunnyvale 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 might this be a better measure of expense control when comparing an investor-owned business with a not- for-profit business? 3.1 Entries for the Warren Clinic 2015 income statement are listed below in alphabetical order. Reorder the data in proper format. Depreciation expense General/administrative expenses Interest expense Investment income Net income Net operating revenues Other revenue Patient service revenue Provision for bad debts Purchased clinic services Salaries and benefits Total expenses $ 90,000 70,000 20,000 40,000 30,000 410,000 10,000 440,000 40,000 90,000 150,000 420,000 3.2 Consider the following income statement: BestCare HMO Statement of Operations 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 Medical supplies and drugs Insurance Depreciation Interest Total expenses Net income $15,154 7,507 3,963 367 385 $27,376 $ 1,237