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, 2020 Revenue: Resident services revenue Other revenue Total revenues Expenses: Salaries and benefits Medical supplies and drugs Insurance and other Depreciation Interest Total expenses Operating income Income tax expense Net income Retained earnings, beginning of year Retained earnings, end of year Assets Current Assets: Cash and cash equivalents Marketable securities Net accounts receivable Supplies Total current assets Property and equipment Less accumulated depreciation $3,163,258 106,146 $3,269,404 Net property and equipment Total assets. $1,515,438 966,781 406,357 85,000 206,780 $3,180,356 Green Valley Nursing Home, Inc. Balance Sheet December 31, 2020 $89,048 31,167 $ 57,881 $ 199,961 $ 257,842 $ 105,737 200,000 215,600 87,655 $ 608,992 $2,250,000 356,000 $1,894,000 $2,502,992 Liabilities and Shareholders' Equity Current Liabilities: Accounts payable Accrued expenses Notes payable Current portion of long-term debt Total current liabilities Long-term debt Total liabilities Shareholders' Equity: Common stock, $10 par value Retained earnings Total shareholders' equity Total liabilities and shareholders' equity $72,250 192,900 100,000 80,000 $ 445,150 Return on assets (ROA) Current ratio Days cash on hand $1,700,000 $2,145,150 a. Perform a Du Pont analysis on Green Valley. Assume that the peer group average ratios are as follows: Average collection period Debt ratio Debt-to-equity ratio Times interest earned (TIE) ratio Fixed asset turnover ratio $ 100,000 257,842 $ 357,842 $2,502,992 Total margin Total asset turnover Equity multiplier Return on equity (ROE) b. Calculate and interpret the following ratios: 3.5% 1.5 2.5 13.1% Peer Group Average 5.2% 2.0 22 days 19 days 71% 2.5 2.6 1.4 c. Assume that there are 10,000 shares of Green Valley's stock outstanding and that some recently sold for $45 per share. What is the firm's price/earnings ratio? What is its market/book ratio? (Hint: These ratios are discussed in the supplement to this chapter.)