Consider this income statement: Green Valley Nursing Home, Inc. Statement of Income Revenue: Year Ended December 31, 2015 Patient service revenue $3,163,258 Less provision for bad debts Net patient service revenue Other revenue Net operating revenues Expenses: Salaries and benefits Medical supplies and drugs Insurance and other Depreciation Interest (110,000) $3,053,258 106,146 $3,159,404 a. How does this income statement differ from the ones presented in Exhibit 3.1 and Problem 3.2? b. Why does Green Valley show a provision for income taxes while the other two income statements do not? c. What is Green Valley's total profit margin? How does this value compare with the values for Sunnyvale Clinic and BestCare? d. The before-tax profit margin for Green Valley is operating income divided by total revenues. Calculate Green Valley's before-tax profit margin. Why might this be a better measure of expense control when comparing an investor-owned business with a not- for-profit business? Reference for A Operating Revenues: Patient service revenue Less: Provision for bad debts Net patient service revenue Premium revenue Other revenue Net operating revenues Expenses: Salaries and benefits Supplies Insurance 2015 2014 $ 150,118 EXHIBIT 3.1 Sunnyvale Clinic: Statements of Operations, $123,565 2,000 1,800 Years Ended $ 148,118 18,782 3,079 $121,765 16,455 December 31, 2,704 2015 and 2014 $ 169,979 $140,924 (in thousands) $ 126,223 $102,334 20,568 18,673 4,518 3,710 3,189 2,603 6,405 5,798 5,329 3,476 $166,232 $136,594 $ 3,747 $ 4,330 Nonoperating income: Contributions $ 243 $ Investment income 3,870 198 3,678 Revenue: Premiums earned Coinsurance Interest and other income $26,682 1,689 242 Total nonoperating income $ 4,113 $ 3,876 Net income $ 7,860 $ 8,206 Total revenues $28,613 $1,515,438 Total expenses 966,781 296,357 85,000 206,780 $3,070,356 Operating income $ 89,048 Provision for income taxes 31,167 Reference for A Net income $ 57,881 3.2 Consider the following income statement: BestCare HMO Statement of Operations Year Ended June 30, 2015 (in thousands) Lease Depreciation Interest Total expenses Operating income Expenses: Salaries and benefits $15,154 Medical supplies and drugs 7,507 Insurance 3,963 Depreciation 367 385 Interest Total expenses Net income $27,376 $ 1,237
Consider this income statement: Green Valley Nursing Home, Inc. Statement of Income Revenue: Year Ended December 31, 2015 Patient service revenue $3,163,258 Less provision for bad debts Net patient service revenue Other revenue Net operating revenues Expenses: Salaries and benefits Medical supplies and drugs Insurance and other Depreciation Interest (110,000) $3,053,258 106,146 $3,159,404 a. How does this income statement differ from the ones presented in Exhibit 3.1 and Problem 3.2? b. Why does Green Valley show a provision for income taxes while the other two income statements do not? c. What is Green Valley's total profit margin? How does this value compare with the values for Sunnyvale Clinic and BestCare? d. The before-tax profit margin for Green Valley is operating income divided by total revenues. Calculate Green Valley's before-tax profit margin. Why might this be a better measure of expense control when comparing an investor-owned business with a not- for-profit business? Reference for A Operating Revenues: Patient service revenue Less: Provision for bad debts Net patient service revenue Premium revenue Other revenue Net operating revenues Expenses: Salaries and benefits Supplies Insurance 2015 2014 $ 150,118 EXHIBIT 3.1 Sunnyvale Clinic: Statements of Operations, $123,565 2,000 1,800 Years Ended $ 148,118 18,782 3,079 $121,765 16,455 December 31, 2,704 2015 and 2014 $ 169,979 $140,924 (in thousands) $ 126,223 $102,334 20,568 18,673 4,518 3,710 3,189 2,603 6,405 5,798 5,329 3,476 $166,232 $136,594 $ 3,747 $ 4,330 Nonoperating income: Contributions $ 243 $ Investment income 3,870 198 3,678 Revenue: Premiums earned Coinsurance Interest and other income $26,682 1,689 242 Total nonoperating income $ 4,113 $ 3,876 Net income $ 7,860 $ 8,206 Total revenues $28,613 $1,515,438 Total expenses 966,781 296,357 85,000 206,780 $3,070,356 Operating income $ 89,048 Provision for income taxes 31,167 Reference for A Net income $ 57,881 3.2 Consider the following income statement: BestCare HMO Statement of Operations Year Ended June 30, 2015 (in thousands) Lease Depreciation Interest Total expenses Operating income Expenses: Salaries and benefits $15,154 Medical supplies and drugs 7,507 Insurance 3,963 Depreciation 367 385 Interest Total expenses Net income $27,376 $ 1,237
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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