Question

Consider the following balance sheet:

BestCare HMO

Balance Sheet

June 30, 2011

(in thousands)

Assets

Current Assets:

Cash                                        $2,737

Net premiums receivable        821

Supplies                                  387

Total current assets    $3,945

Net property and equipment             $5,924

Total assets                                         $9,869

Liabilities and Net Assets

Accounts payable—medical

Services                                   $2,145

Accrued expenses                               929

Notes payable                                     382

            Total current liabilities            $3,456

Long-term debt                                   $4,295

Total liabilities                        $7,751

Net assets—unrestricted

(equity)                                   $2,118

Total liabilities and net

Assets                                     $9,869

Consider the following financial statements for Green Valley Nursing Home, Inc. a for profit long-term care facility:

Green Valley Nursing Home Inc.
Balance Sheet
December 31, 2011
Assets
Current assets:
Cash $105,737
Marketable securities 200,000
Net patient accounts receivables 215,600
Supplies 87,655
Total current assets $608,992
Property and equipment $2,250,000
Less accumulated depreciation 356,000
Net property and equipment $1,894,000
Total assets $2,502,992
Liabilities and Shareholder?s Equity
Current liabilities:
Accounts payable $72,250
Accrued expenses 192,900
Notes payable 100,000
Current portion of long-term debt 80,000
Total current liabilities $445,150
Long term debt $1,700,000
Shareholders? Equity:
Common stock, $10 par value $100,000
Retained earnings 257,842
Total shareholder?s equity $357,842
Total liabilities and shareholders? equity $2,502,992

A. WHAT IS THE PRIMARY DIFFERENCE BETWEEN THESE 2 STATEMENTS

c. What was Green Valley's total debt ratio?*************************************
Current liabilities
LT liabilities
Total liabilities (debt)
Total assets
Total debt ratio

Answer 1

A.

The Major Difference is that both financial statements are of different period and so it cant be compared with each other. The 2nd major difference that Green Valley Nursing Home is way bigger than Best Care HMO. We can clearly say this by looking at Equity/ net asset of the company. However, this statements cant be compared with each other.

B. Total Debt Ratio is calculated by dividing Total Liabilities by Total Assets. It Measures how much debt entity uses as compared to assets.

Current liabilities	445150
LT liabilities	1700000
Total liabilities (debt)	2145150
Total assets	2502992
Total debt ratio	0.857034