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CASE STUDY- MMC Financial Status Analysis




CASE STUDY- MMC Financial Status Analysis;CASE STUDY;Major Medical Center;For the Major Medical Center financial statements on the following pages, complete the following;a.;Read the auditor?s opinion letter. Are any flags raised?;b.;Review the financial statements. Search for unusual items. What things catch your eye on the balance sheet, operating statement, and cash flow statement?;c.;Review the Notes. Do any of them raise cause for concern?;d.;Calculate the following ratios: common size, current, quick, days of cash on hand, receivables turnover, average collection period, fixed asset turnover, total asset turnover, debt, debt to equity, times-interest-earned, operating margin, total margin, Return on assets (ROA), and Return on net assets(RONA).;e.;What do you think of Major Medical Center?s financial status?;I.N. SINCER AND OLD, CPAs;2650 East 38 th Street;New York, New York 10089;Report of the Independent Auditors;Board of Trustees;Major Medical Center;We have audited the accompanying statements of financial position of Major Medical Center (the ?Medical Center?) as of December 31, 2012 and 2011, and the related state of operation, changes in net assets, and cash flows for the years then ended. These financial statements are the responsibility of the Medical Centers management. Our responsibility is to express an opinion on these financial statements based on our audits.;We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.;In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Major Medical Center at December 31, 2012 and 2011, and the results of its operations, changes in net assets, and cash flows for the years then ended, in conformity with generally accepted accounting principles.;Major Medical Center;(In Thousands);Statements of Financial Position (December 31);2012;2011;Cash and cash equivalents;8,065;$9,065;Compensating balance for letters of credit;1,000;Short-term investments;1,387;1,283;Receivables;49,719;47,614;Pledges receivable;1,814;2,205;Inventories, at average cost;1,690;2,326;Due from third-party reimbursement programs;6,539;Receivables for government grants;467;Other;2,234;3,415;Total Current Assets;72,448;66,315;Sinking fund;14,487;13,410;Compensating balance for standby letters of credit;923;Long-term investments;1,132;618;Due from affiliates, net;3,417;3,543;Pledges receivable;1,889;1,468;Property, plant, and equipment net;98,555;89,777;Deferred financing costs;1,323;Other;2,065;1,043;Total Assets;$196,239;$176,174;Liabilities and Net Assets;Current portion of long-term debt;$11,608;$11,488;Accounts payable and accrued expenses and related liabilities;25,572;20,096;Accrued salaries;29,489;25,311;Due to third-party reimbursement programs, net;1,874;Advances on government grants;1,587;Total Current liabilities;68,256;58,769;Long term debt, less current portion;55,539;47,709;Accrued post-retirement benefits;6,023;6,017;Other noncurrent liabilities;16,445;17,014;Total Liabilities;146,263;129,509;Commitments and contingencies;Unrestricted;40,582;38,014;Temporarily restricted;8,262;7,519;Permanently restricted;1,132;1,132;Total Net Assets;49,976;46,665;Major Medical Center;(In Thousands);Statements of Operations(Year ended December 31);2012;2011;Net patient service revenue;$402,921;369,512;Other revenue;13,356;13,850;Net assets released from restrictions;4,708;2,863;Total Operating Revenue;420,985;386,225;Salaries and wages;207,141;196,453;Employee benefits Paper#78318 | Written in 18-Jul-2015

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