Gapenski Healthcare Finance Unit 3 , 3.5 Problem Solving

#3.5 Brandywine Homecare Brandywine Homecare, a not-for- meshwork business, had revenues of $12 million in 2007. Expenses other(a) than disparagement numerateed 75 percent of revenues, and disparagement outgo was $1.5 million. completely revenues were collected in bills during the year and all disbursements other than depreciation were paid in currency. A. Construct Brandywines 2007 income statement. Brandywine Homecare Income statement calendar month stopping point December 31, 2007 Revenue $12,000,000 issue forth revenue $12,000,000 Expenses: disparagement $ 1,500,000 early(a) 12,000,000 x 75/ degree centigrade = 9,000,000 Total expenses= wear and level + Other expenses= 1,500,000+ 9,000,000= $10,500,000 Total revenue essence expenses = Net income or Profit - 12,000,000- 10,500,000= 1,500,000 B. What were Brandywines 2007 internet income, sum of money profit margin, and limiting flow? The net income = $1,500,000. do profit margi n= primitive margin and is equal with net income divided by total revenues. $1,500,000/$12,000,000 = 0.125 or 12.5% Each dollar of revenue produces 12.5% of net income or profit. Cash flow= silver generated during the year The rough inclination of cash flow = net income + non -cash expenses, in this case, $1,500,000 + $1,500,000 = 3,000,000 C.

Now, suppose the confederation substituted its depreciation calculation procedures (still within GAAP) such that its depreciation expense doubled. How would this change affect Brandywines net income, total profit margin, and cash flow? Brandywine Homecare Income statement with double depreciation expense: calendar month ending December 31, 2007 Revenue $12,000,000 Tot! al revenue $12,000,000 Expenses: derogation $ 1,500,000x2= 3,000,000 Other 12,000,000 x 75/100 = 9,000,000 Total expenses= dispraise + Other expenses= 1,500,000x2+ 9,000,000= $12,000,000 Total revenue total expenses = Net income or Profit - 12,000,000- 12,000,000= 0 What were Brandywines 2007 net income, total profit margin, and cash flow? The net income = $0 Total...If you want to get a full essay, order it on our website: OrderEssay.net

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