Assignment#2 – Solve the problem in the attachment.

Assignment#2 – Solve the problem in the attachment.

PROBLEMS

The problems below are based on the following simplified financial statements for Mercy Health Services:

Mercy Health Services
Statement of Cash Flows
For the Fiscal Years Ending June 30, 2013 and 2012

2013        2012
Cash flows from operating activities
Collections from patients and third-party payers    $21,000     $16,000
Collections from other operating activities            2,000        1,400
Payments to suppliers                 (1,700)    (800)
Interest payments                    (2,000)    (2,000)    Payments to employees                (15,100)    (12,500)
Net cash from operating activities            $ 4,200    $   2,100

Cash flows from investing activities
Purchase new equipment                $ (3,000)    $          0    Purchase marketable securities                   (200)                0

Increase in sinking fund                       (200)      (200)
Net cash from investing activities            $   (3,400)    $    (200)

Cash flows from financing activities
Payments of mortgage principal            $   (2,000)    $ (1,800)
New mortgage                        1,200              0
Net cash used for financing activities            $     (800)    $ (1,800)

Net increase/(decrease) in cash                $            0    $      100
Cash, beginning of year                              500           400
Cash, end of year                        $        500    $      500

Mercy Health Services
Statement of Financial Position
As of June 30, 2013 and 2012

ASSETS                    2013        2012
Current
Cash        $500        $500
Marketable securities            400    200
Accounts receivable, net of $400
and $300 allowance for bad debts    3,000    2,000
Inventory                1,000    500
Prepaid assets                100    100
Total current assets            $5,000    $3,300

Fixed
Property, plant, and equipment    $43,000      $40,000
Less accumulated depreciation    17,800    16,000
Net property, plant, and equipment    $25,200      $24,000
Sinking fund                1,800          1,600
Investments                300    300
Total fixed assets            $27,300    $25,900

Total                    $32,300    $29,200

EQUITIES
Current liabilities
Wages payable                $700           $500
Accounts payable                  700            1,000
Notes payable                      500             500
Deferred revenue                  300             300
Taxes payable                100    100
Total current liabilities            $ 2,300    $ 2,400

Long-term liabilities
Mortgage payable            $ 4,200       $ 5,000
Bonds payable                20,000    20,000
Total long-term liabilities        $24,200    $25,000

Net Assets
Unrestricted net assets            $ 5,800    $ 1,800
Total net assets            $ 5,800    $ 1,800
Total                    $32,300    $29,200

Mercy Health Services
Statement of Operations
For the Fiscal Years Ending June 30, 2013 and 2012

2013        2012
Revenues
Patient revenues            $22,000    $17,000
Other operating revenues        2,000    1,400
Total revenues                    24,000    $18,400

Expenses
Wages for clinical services        $11,000      $9,000
Patient care supplies and food               600           400
Housekeeping services               800           500
Operation and maintenance of plant        1,200        1,000
Administrative services            2,200        2,000
Depreciation and amortization        1,800        1,200
Bad debt expense                   400           300
Interest                    2,000    2,000
Total expenses                    20,000    $16,400

Increase in unrestricted net assets        $ 4,000    $ 2,000

1.    Using these simplified financial statements for Mercy Health Services, complete the following ratios for both 2012 and 2013:
a.    Common size cash
b.    Common size current liabilities
c.    Common size wages for clinical services
d.    Current ratio
e.    Debt service coverage
f.    Plant age
g.    Revenue to assets
h.    Profit margin

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