Consider the following financial statements for BestCare HMO a n Show more I need to figure out part a and b. 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 2012 (in thousands) Revenue: Premiums earned $26682 Coinsurance $1689 Interest and other income $242 Total revenue $28613 Expenses: Salaries and benefits $15154 Medical supplies and drugs $7507 Insurance $3963 Provision for bad debts $19 Depreciation $367 Interest $385 Total expenses $27395 Net income $1218 Net assets beginning of year $900 Net assets end of year $2118 BestCare HMO Balance Sheet Year Ended June 30 2012 (in thousands) Assets Cash and cash equivalents $2737 Net premiums receivable $821 Supplies $387 Total current assets $3945 Net property and equipment $5924 Total assets $9869 Liabilities and Net Assets Accounts payable medical services $2145 Accrued expenses $929 Notes payable $141 Current portion of long-term debt $241 Total current liabilities $3456 Long-term debt $4295 Total liabilities $7751 Net assets unrestricted (equity) $2118 Total liabilities and net assets $9869 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 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 ratio 2.8 Fixed asset turnover ratio 5.2 Show less
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