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apenski's Fundamentals of Healthcare Finance 11.3 Consider this income statement: Green Valley Nursing Home Inc. Statement of Income, Year Ended December 31, 2016 Revenue Resident
apenski's Fundamentals of Healthcare Finance 11.3 Consider this income statement: Green Valley Nursing Home Inc. Statement of Income, Year Ended December 31, 2016 Revenue Resident services revenue $3,163,258 Provision for bad debts (110,000) Other revenue 106,146 Total revenues $3,159,404 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 Income tax expense 31,167 Net income $ 57,881 a. How does this income statement differ from the ones presented in exhibits 11.1 and 11.2 and problem 11.2? b. Why does Green Valley show an income tax expense? C. What is Green Valley's total profit margin? How does this value compare with the values for Park Ridge Homecare and BestCare Health Insurer? 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? 11.4 Great Forks Hospital reported net income for 2016 of $2.4 million on total revenues apenski's Fundamentals of Healthcare Finance 11.3 Consider this income statement: Green Valley Nursing Home Inc. Statement of Income, Year Ended December 31, 2016 Revenue Resident services revenue $3,163,258 Provision for bad debts (110,000) Other revenue 106,146 Total revenues $3,159,404 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 Income tax expense 31,167 Net income $ 57,881 a. How does this income statement differ from the ones presented in exhibits 11.1 and 11.2 and problem 11.2? b. Why does Green Valley show an income tax expense? C. What is Green Valley's total profit margin? How does this value compare with the values for Park Ridge Homecare and BestCare Health Insurer? 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? 11.4 Great Forks Hospital reported net income for 2016 of $2.4 million on total revenues
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