Question
I need help and understanding to answer a). & b). questions can I get a tutor to help? Consider the following financial statements for Best
I need help and understanding to answer a). & b). questions can I get a tutor to help?
Consider the following financial statements for Best Care HMO, a not-for-profit managed care plan:
Best Care HMO | BestCare HMO | |||||||||||||||||
Statement of Operations and Change in Net Assets | Balance Sheet | |||||||||||||||||
Year Ended June 30, 2011 | 30-Jun-11 | |||||||||||||||||
(in thousands) | ||||||||||||||||||
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Revenue: |
| $2,737 | ||||||||||||||||
Premiums earned | $26,682 |
| 821 | |||||||||||||||
Co-insurance | 1,689 |
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| 387 | |||||||||||||
Interest and other income | 242 |
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| $3,945 | ||||||||||||||
| $5,924 | |||||||||||||||||
Total Revenue | $28,613 |
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| $9,869 | ||||||||||||||||
Expenses: |
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Salaries and benefits | $15,154 |
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Medical supplies and drugs | 7,507 |
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Insurance | 3,963 |
| $2,145 | |||||||||||||||
Provision for bad debts | 19 |
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| 929 | ||||||||||||||
Depreciation | 367 |
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| 141 | ||||||||||||||
Interest | 385 |
| 241 | |||||||||||||||
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| $3,456 | ||||||||||||||||
Total expenses | $27,395 |
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| $4,295 | ||||||||||||||
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| $7,751 | ||||||||||||||||
Net Income | $1,218 |
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| $2,118 | ||||||||||||||
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Net assets, beginning of year | $900 |
| $9,869 | |||||||||||||||
Net assets, end of year | $2,118 |
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BestCare HMO |
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Balance Sheet |
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30-Jun-11 |
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Assets |
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Cash and cash equivalents | $2,737 |
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Net premiums receivable | 821 |
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Supplies | 387 |
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Total current assets | $3,945 |
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Net property and equipment | $5,924 |
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Total assets | $9,869 |
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Liabilities and Net Assets |
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Accounts payable-medical services | $2,145 |
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Accrued expenses | 929 |
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Notes payable | 141 |
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Current portion of long-term debt | 241 |
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Total current liabilities | $3,456 |
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Long-term debt | $4,295 |
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Total liabilities | $7,751 |
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Net assets (equity) | $2,118 |
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Total liabilities and net assets | $9,869 a. Perform a Du Pont analysis on BestCare. Assume that the industry average ratios are as follows: Total margin 3.8% Total asset turnover 2.1% Equity multiplier 3.2 Return on equity (ROE) 25.5% b. Calculate and interpret the following ratios for BestCare: Industry Average Return on assets (ROA) 8.0% Current ratio 1.3 Days cash on hand 41 days Average collection period 07 days Debt ratio 69% Debt-to-equity ratio 2.2 Times interest earned (TIE) ratio 2.8 Fixed asset turnover ratio 5.2 |
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