Question

Assume that Exhibits 6a and 6b show two hypothetical financial statements for your program for the...

  1. Assume that Exhibits 6a and 6b show two hypothetical financial statements for your program for the years 2019 and 2020.

Exhabit 6a

2019

2020

Revenues

    Net patient service revenues

$600,000

$750,000

    Other revenues

$30,000

$18,000

Expenses

    Salaries and wages

$200,450

$124,680

    Fringe benefits

$18,300

$24,080

    Interest expenses

$11,810

$15,980

    Insurance

$23,500

$26,580

    Medical supplies and drugs

$90,360

$103,390

    General services

$6,220

$6,550

    Others

$1,400

$2,010

Exhabit 6b

2019

2020

Current assets

   Cash and cash equivalents

$250,000

$350,000

   Net accounts receivables

$55,000

$45,000

   Inventories

$50,000

$30,000

Noncurrent assets

    Plant, property, and equipment

$1,000,000

$1,200,000

    Accumulated depreciation

$200,000

$250,000

Current liabilities

    Accounts payable

$40,000

$50,000

    Salaries payable

$30,000

$25,000

    Notes payable

$15,000

$5,000

Long-term liabilities

$65,000

$80,000

  1. Using the financial data presented in Exhibits 6a and 6b, calculate:
    1. Net assets in 2019
    2. Current and quick ratios for 2019
    3. The Return on Net Assets Ratio for 2020
    4. Fixed Asset Turnover ratio for 2020

Homework Answers

Answer #1

Net Assets in 2019 = 1,000,000 - 200,000 = 800,000

Current Assets = Cash + Net Account Receivables + Inventories = 250,000 +55,000 + 50000 = 355000
Current Liabilities = Accounts Payable + Salaries Payable + Notes Payable = 40000+30000+15000 = 85000
Current Ratio in 2019 = Current Assets/Current Liabilities = 355000/85000 = 4.18
Quick Ratio =(Current Assets-Inventories)/Current Liabilities =(355000-50000)/85000 = 3.59


Net Income = Total revenue - Total Expenses =(750000+18000)-(124680+24080+15980+26580+103390+6550+2010)
=464730
Return on Net Assets =Net Income/Total net assets = 464730/(1200000-250000) = 0.49

Fixed Assets Turnover = (Total revenue/Fixed Assets) = (750000+18000)/(1200000-250000) =0.81

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