Details of this Paper

Consider the following financial statements for BestCare




17.4 Consider the following financial statements for BestCare HMO, a not-for-profit managed care plan;BestCare HMO;Statement of Operations and Change in Net Assets;Year Ended June 30, 2011;(in thousands);Revenue;Premiums earned $26,682;Coinsurance $1,689;Interest and other income $242;Total revenue $28,613;Expenses;Salaries and benefits $15,154;Medical supplies and drugs $7,507;Insurance $3,963;Provision for bad debts $19;Depreciation $367;Interest $385;Total expenses $27,395;Net income $1,218;Net assets, beginning of year $900;Net assets, end of year $2,118;BestCare HMO;Balance Sheet;Year Ended June 30, 2011;(in thousands);Assets;Cash and cash equivalents $2,737;Net premiums receivable $821;Supplies $387;Total current assets $3,945;Net property and equipment $5,924;Total assets $9,869;Liabilities and Net Assets;Accounts payable - medical services $2,145;Accrued expenses $929;Notes payable $141;Current portion of long-term debt $241;Total current liabilities $3,456;Long-term debt $4,295;Total liabilities $7,751;Net assets - unrestricted (equity) $2,118;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 7 days;Debt ratio 69%;Debt-to-equity ratio 2.2;Times interest earned (TIE) ratio 2.8;Fixed asset turnover ratio 5.2


Paper#19528 | Written in 18-Jul-2015

Price : $37