BestCare HMO Statements of Operations and Change in Net Assets
AccFinCostEcoExpertBestCare HMO
Statements of Operations and Change in Net Assets
Year Ended June 30, 2011
(In thousands)
Revenue:
Premiums earned 26,682
Co-insurance 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 Expenses27,395
Net Income1218, 00
Net assets beginning of year9000, 00
Net assets end of year 2,118.00
BestCare HMO
Balance Sheet
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 equipment5,924
Total Assets9,869
Liabilities and Net Assets
Accounts payable-medical services 2,145
Accrued expenses 929
Notes payable 141
Current portion of long- term debt241
Total Current Liabilities 3,456
Long-term debt 4,295
Total Liabilities 7,751
Net Assets(equity) 2,118
Total liabilities and net assets 9,869
Questions
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) 2.8
Fixed asset turnover ratio 5.2
10 years ago
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