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Use Additional Information from 1 0 - K to Explain Linkages Among Financial Statements Community Health Systems operates general acute care hospitals in communities across
Use Additional Information from K to Explain Linkages Among Financial Statements
Community Health Systems operates general acute care hospitals in communities across the United States. The company reports the following information in Schedule II of its K
SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS
Balance at Acquisitions Bad Balance
Beginning and Debt Write at End
$ millions of Year Dispositions Expense Offs of Year
December allowance for doubtful accounts $ $ $ $ $
December allowance for doubtful accounts
December allowance for doubtful accounts
Accounts receivable represents the amount customers owe Community Health Systems for services rendered. The balance in the allowance for doubtful accounts is the companys best estimate of the amount that customers will not repay. Community Health Systems' balance sheet and income statement reported the following.
$ millions
Revenue $ $ $
Operating income loss before tax
Total assets
a
Compute the commonsize allowance for doubtful accounts for each year.
Note: Round percentage to one decimal point for example, round to
Common size allowance Answer
Answer
Answer
What conclusion may be drawn by analysts in comparing the commonsize allowance in to the previous years?
Answer
b On average, the firms in the S&P report commonsize allowance for doubtful accounts between and Why might Community Health Systems ratio be so much higher?
Community Health Systems now has: Answer
c
Compute the commonsize bad debt expense for each year.
Note: Round percentage to one decimal point for example, round to
Common size allowance Answer
Answer
Answer
What trend is implied by the commonsize analysis of bad debt expense?
Community Health Systems has: Answer
d If the company had recorded bad debt expense of $ in which is $ less than actually recorded which of the following would be true? Ignore taxes for this question.
Answer
The company would have reported operating loss of $ and cash flow would have been $ higher.
Answer
The company would have reported operating loss of $ and cash flow would have been $ higher.
Answer
The company would have reported operating loss of $ and cash flow would have been unchanged.
Answer
The company would have reported operating loss of $ and cash flow would have been unchanged.
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