Consider the following financial statements for Green Valley Nursing Home, Inc. a for profit long-term care facility:

Green Valley Nursing Home Inc.

Statement of Income and Retained Earnings

Year Ended December 31, 2011

Revenue:

Net patient service revenue $3,163,258

Other revenue 106,146

Expenses:

Salaries and benefits $1,515,438

Medical supplies and drugs 966,781

Insurance and other 296,357

Provision for bad debts 110,000

Depreciation 85,000

Interest 206,780

Total expenses $3,180,356

Operating Income $89,048

Provision for income tax 31,167

Net Income $57,881

a) HOW DOES THIS INCOME STATEMENT DIFFER FROM THE ONES PRESENTED IN EXHIBIT 3.1? AND 3.2?

B) WHY DOES GREEN VALLEY SHOW A PROVISION FOR INCOME TAXES WHILE THE OTHER TWO INCOME STATEMENT DID NOT?

C) WHAT IS GREEN VALLEYS TOTAL MARGIN? HOW DOES THSI VALUE COMPARE WITHE 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 valleys before tax profit margin. Why may this be a better measure of expense control when comparing an investor owned business with a not for business?

question -2

Find the following values for a lump sum assuming annual compounding:

9.1a The future value of $650 invested at 8.8% for one year. (note the change in number)

9.1b The future value of $650 invested at 8.8% for five years (note the change in number)

9.1c The present value of $650 to be received in one year when the opportunity cost rate is8.8% (note the change in number)

9.1d The present value of $650 to be received in five years when the opportunity cost rate is8.8% (note the change in number)