In the template, you are given financial statements for year ended December 31, 20X4 (similar to the ones you used and prepared in Weeks 1 and 2). Using the financial statements, you will prepare a budget with your suggestions based on what you learn in Week 3 and 4. There will also be some questions to answers to justify your suggestions. All work will be done on the Student Template. Once complete, please save the Student Template with your name in the file name (for example: John Doe - Project #2 or John Doe - Budget Project) and upload under the appropriate box in Week 4.

Read the scenario below and answer the following 3 questions (be sure to scroll down). You will also need to complete the Budget on the "Income Statement & Budget" tab. Scenario: South Shore Medical Clinic is expanding its operations. As you will notice from Year 3 to Year 4, they have increased their revenue and encounter additional expenses. In addition, they have rented a new office at the end of the year so their rent expense is going to increase (they will now have two offices). In addition, they have added 2 additional staff members to payroll. Using the Income Statement, prepare a budget that takes these changes into account for the upcoming year.

1. using the Balance Sheet, calculate the current ratio. Comment on whether or not the ratio shows financial strength.

2. using the Income Statement, calculate the operating margin ratio for Year 4. How well does the company measure in terms of operating efficiency?

3. Explain your budget suggestions. Do you think Revenue will increase or decrease? Do you think Expenses will increase or decrease?

Salaries Expense

78500

Rent Expense 24000

Utilities Expense 2500

Total Expenses

105000

Income:

Net Income

20000