For this critical thinking assignment, we will utilize problem 13.5 on page 415 of our text. You are given financial statements for Green Valley Nursing Homes. Pay attention to part B which is the ratio assessment area of this problem and not part A. You have been asked to put together a presentation displaying the different ratios of this assignment along with an interpretation of the results. Prepare this presentation as if you are giving it to the Chief Financial Officer and the Chief Executive Officer of the Green Valley Nursing Home. After performing the ratios listed on part B of the assignment: Calculate the ratios listed. Interpret the results of your ratio: 1-3 lines. Compare your results with the sector average on that ratio slide: 1-3 lines. Provide your recommendation for the nursing home based on results of your ratio analysis: 1-3 lines.
Green Valley Nursing Home Inc. Statement of Income and Retained Earnings, Year Ended December 31, 2016 Revenue Resident services revenue $3,163,258 Provision for bad debts 110,000 Net resident services revenue 3,053,258 Other revenue 106,146 Total revenues $3,159,404 Expenses Salaries and benefits $1,515,438 Medical supplies and drugs 966,781 Insurance and other 296,357 Depreciation 85,000 Interest 206,780 Total expenses $3,070,356 Operating income $ 89,048 Income tax expense 31,167 Net income $ 57,881 Retained earnings, beginning of year $ 199,961 Retained earnings, end of year $ 257,842 Green Valley Nursing Home Inc. Balance Sheet, December 31, 2016 ASSETS Current assets Cash $ 105,737 Short-term securities 200,000 Net accounts receivable 215,600 Supplies 87,655 Total current assets $ 608,992 Property and equipment 2,250,000 Less: Accumulated depreciation 356,000 Net property and equipment $1,894,000 Total assets $2,502,992 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 72,250 Accrued expenses 192,900 Notes payable 100,000 Current portion of long-term debt 80,000 Total current liabilities $ 445,150 Long-term debt $1,700,000 Shareholders' equity Common stock, $10 par value $ 100,000 Retained earnings 257,842 Total shareholders' equity $ 357,842 Total liabilities and shareholders' equity $2,502,992 Green Valley Nursing Home Inc. Statement of Income and Retained Earnings, Year Ended December 31, 2016 Revenue Resident services revenue $3,163,258 Provision for bad debts 110,000 Net resident services revenue 3,053,258 Other revenue 106,146 Total revenues $3,159,404 Expenses Salaries and benefits $1,515,438 Medical supplies and drugs 966,781 Insurance and other 296,357 Depreciation 85,000 Interest 206,780 Total expenses $3,070,356 Operating income $ 89,048 Income tax expense 31,167 Net income $ 57,881 Retained earnings, beginning of year $ 199,961 Retained earnings, end of year $ 257,842 Green Valley Nursing Home Inc. Balance Sheet, December 31, 2016 ASSETS Current assets Cash $ 105,737 Short-term securities 200,000 Net accounts receivable 215,600 Supplies 87,655 Total current assets $ 608,992 Property and equipment 2,250,000 Less: Accumulated depreciation 356,000 Net property and equipment $1,894,000 Total assets $2,502,992 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 72,250 Accrued expenses 192,900 Notes payable 100,000 Current portion of long-term debt 80,000 Total current liabilities $ 445,150 Long-term debt $1,700,000 Shareholders' equity Common stock, $10 par value $ 100,000 Retained earnings 257,842 Total shareholders' equity $ 357,842 Total liabilities and shareholders' equity $2,502,992
