Consider this income statement:

Green Valley Nursing Home, Inc. Statement of Income

Year Ended December $31,2011$

Revenue:

Net patient service revenue Other revenue

Total revenues

Expenses:

Salaries and benefits Medical supplies and drugs Insurance and other Provision for bad debts Depreciation

Interest

Total expenses Operating income

Provision for income taxes Net income

$$3,163,258106,146$ $$3,269,404$

$$1,515,438966,781296,357110,00085,000206,780$ $$3,180,356$ $ $89,04831,167$ $ $57,881$

a$.$ How does this income statement differ from the ones presented in Exhibit $3\mathrm{.}1$ and Problem $3\mathrm{.}2?$

b$.$ Why does Green Valley show a provision for income taxes while the other two income statements did not?

c$.$ What is Green Valley$$s total profit margin? How does this value com$-$ pare with the values for Sunnyvale Clinic and BestCare?

d$.$ The before$-$tax profit margin for Green Valley is operating in$-$ come divided by total revenues. Calculate Green Valley$$s before$-$ tax profit margin. Why may this be a better measure of expense control when comparing an investor$-$owned business with a not$-$ for$-$profit business?$3\mathrm{.}3$ Consider this income statement:

Green Valley Nursing Home, Inc.

Statement of Income

Year Ended December $31,2011$

Revenue:

Net patient service revenue

Other revenue

Total revenues

$$3,163,258$

$\frac{106,146}{\text{\$}3,269,404}$

$$1,515,438$

$966,781$

$296,357$

$110,000$

$85,000$

$206,780$

$$3,180,356$

$$89,048$

$[31,167],[$$$,57,881]$

a$.$ How does this income statement differ from the ones presented in

Exhibit $3\mathrm{.}1$ and Problem $3\mathrm{.}2?$

b$.$ Why does Green Valley show a provision for income taxes while the

other two income statements did not?

c$.$ What is Green Valley's total profit margin? How does this value com$-$

pare with the values for Sunnyvale Clinic and BestCare?

d$.$ The before$-$tax profit margin for Green Valley is operating in$-$

come divided by total revenues. Calculate Green Valley's before$-$

tax profit margin. Why may this be a better measure of expense

control when comparing an investor$-$owned business with a not$-$

for$-$profit business?