Case Study 1: Financial Statements Operating Revenue Net Patient Service Revenue $ 1,650,000 Other Revenue 70,000 Total Operating Revenue 1,720,000 Operating Expenses Salary, Wages, & Fringe Benefits 1,292,000 Provision for Bad Debts 50,000 Depreciation 12,000 Other Expenses 80,000 Total Operating Expenses 1,434,000 Income (loss) from operation $ 286,000 Non-Operating Gains (losses) Total Non-operating Gains (losses) 44,000 Net Income / (Loss) $ 330,000 Income Statement - End of Year Assets: Cash and cash equivalents $ 10,000 Patient Accounts Receivable 800,000 Prepaid Expenses 5,000 Total Current Assets 815,000 Property, Plant & Equipment 96,000 Total Non- Current Assets 96,000 Total Assets $ 911,000 Liabilities and Equity: Accounts Payable and accrued expenses 145,000 Total Current Liabilities 145,000 Long-term Debt 320,000 Total Non-Current Liabilities 320,000 Unrestricted net assets 446,000 Total Equity 446,000 Total Liabilities and Equity $ 911,000 Balance Sheet - End of Year Financial Indicators: Working Capital $ 670,000 Current Ratio 5.6 Days in Patient A/R 177.0 Days Cash on Hand 2.6 Other Metrics: Unbilled A/R $ 566,250 % in A/R more than 90 days 21% This medical practice has five physician partners and a good income statement (it is profitable). The practice's policy is to pay bonuses to the partners if there is a cash surplus at the end of the year. It pays up to a total of $300,000 in shared bonuses annually (each doctor would earn up to $60,000). However, at the end of the year, despite higher revenue than expenses, there is little cash surplus. The Practice plans to collect $7,000 per day. If you were the managing partner, what would be the plan? For part one of your paper, answer these questions: Summarize the information shown on the financial statement for CS #1. How much of the bonus can the practice pay right now? How long will the MDs have to wait to receive their bonus in full? What could be done to shorten the time period? What metrics are impeding cash flow? How did you arrive at the conclusion from review of the financial statement?