Henson Cancer Research Center (HCRC) is an established research and treatment facility, located in the Blue Ridge Mountains. HCRC is considering an expansion opportunity but must first fully analyze the organizations financial health before moving forward with the expansion. The organization operates 360 days per year, generates $30,000,000 in annual revenues and utilizes an all-equity approach to debt financing. Operating profit is $5,000,000 and the organization holds $12,000,000 in assets. As a newly hired financial analyst, it is now your responsibility to perform the necessary calculations and provide a final report to the executive team.

5. Calculate the: a) ACP, b) ADS and c) current receivables balance if claims are paid as follows: 15% in 30 days, 40% in 60 days and 45% in 90 days. (15 points)

6. HMCRC has a new accounting system, which enables them to fine-tune their billing and collections operation. They can now collect: 40% in 30 days, 45% in 60 days and 15% in 90 days. What is the new receivables balance? (15 points)

7. Prepare HMCRCs financial statements, comparing its current all-equity financing to a possible 70% debt financing approach. Assume an interest rate of 7% and a tax rate of 33% for your calculations. The statements MUST show assets, liabilities, net income and ROE. (20 points) *** Hint: the solution includes a balance sheet as well as an income statement.