Figure A.Statement of Operations, Year End

Revenue

Healthcare Premiums $26,682

Fees and other Revenue $1,689

Net Investment Income$242

Total Revenue $ 28, 613

Benefits and expenses

Healthcare costs $15,154

Operating Expenses

Selling expenses $3,963

General Administrative Expenses $7,893

Interest Expense$385

Total Expenses $27,395

Net Income $1,218

Figure B.Ratios

Return on assets 8.0%

Current Ratio 1.3

DCOH41 DAYS

(ASSUME DEPRECIATION EXPENSE IS $367)

Average Collection Period 7 DAYS

Debt ratio69%

Debt to equity ratio2.2

Times interest earned ratio2.8

Fixed asset turnover ratio18.5

You are given financial statements for Best Care, which is a healthcare insurer. Your boss asked you to Review these financial statements in this problem in figure A.

After performing the DuPont analysis, explain the analysis in your memo of your recommendation.

Calculate the ratios for figure B

Assets and liabilities are listed below

Assets

Cash and cash equivalents $2,737

Net premium receivable $821

Other current assets $387

Total Current Assets $3,945

Long term investments $4,424

Net property and equipment $1,500

Total Assets$9,869

Liabilities and Equity

Healthcare cost payable$2,145

Accrued Expenses $929

Unearned Premiums $382

Total Current liabilities $3,456

Long Term debt $4,295

Total Liabilities$7,751

Equity $2,118

Total liabilities and equity $9,869

Average Ratios are the following:

Total Margin 3.8%

Total Asset Turnover 2.1

Equity Multiplier3.2

Return on equity 25.5%