1. Chesapeake Health Plans is a Health Maintenance Organization (HMO). Its Statement of Cash Flows is included in the Excel file Exam 3 Support.
   1. Compute the following ratios for 2015 and 2014. Interpret relative to historical data and industry average.
      1. Total Margin (5 points)
      2. Return on Assets (5 points)
      3. Return on Equity (5 points)

47 Chesapeake Health Plans (HMO) 48 Balance Sheet (\$000s) \begin{tabular}{|l|r|r|r|} \hline 49 & & & \\ \hline 50 & & 2015 & 2014 \\ \hline 51 & Cash and equivalents & $2,937 & $1,021 \\ \hline 52 & Premiums receivable & $818 & $767 \\ \hline 53 & Supplies & $190 & $184 \\ \hline 54 & Total current assets & $3,945 & $1,972 \\ \hline 55 & Propoerty and equipment, net & $5,924 & $5,797 \\ \hline 56 & Total assets & $9,869 & $7,769 \\ \hline 57 & & & \\ \hline 58 & Accounts payable & $2,245 & $1,471 \\ \hline 59 & Accrued expenses & $829 & $661 \\ \hline 60 & Notes payable & $141 & $246 \\ \hline 61 & Current portion of long-term debt & $241 & $109 \\ \hline 62 & Total current liabilities & $3,456 & $2,487 \\ \hline 63 & Long-term debt & $4,295 & $2,382 \\ \hline 64 & Net assets (equity) & $2,118 & $2,900 \\ \hline 65 & Total liabilities and equity & $9,869 & $7,769 \\ \hline \end{tabular} 66 68 Chesapeake Health Plans (HMO) 692015 Statement of Cash Flows (\$000s) 73 Change in net assets (net income) (\$782) 74 Adjustments: \begin{tabular}{l|l} \hline 75 & Depreciation \\ \hline 76 & Increase in receivables \\ 77 & Increase in inventories \\ 78 & Increase in accounts payable \\ \hline 79 & Increase in accruals \\ \hline 80 & Net flow from operations \\ \hline 81 & \\ \hline 82 & Cash flows from investing activities \\ \hline 83 & Investment inplant and equipment \end{tabular} 2015 83 Investment inplant and equipment ($494) 85 Cash flows from financing activities \begin{tabular}{|l|r|r|} \hline 86 & Repayment of notes payable & ($105) \\ \hline 87 & Change in current portion of LT debt & $132 \\ \hline 88 & Increase in LT debt & $1,913 \\ \hline 89 & Net cash flow from financing & $1,940 \\ \hline \end{tabular} 1 QUESTION #1