October 19, 2011
Health Financial Management- HSA 525
Instructor- Dr. Forbes
Assignment # 1
1. Construct a Brandywine’s Income Statement.
This income statement summarizes the company’s performance during 2007. It reflects how much money the company brought in as revenues, how much spent on expenses, and the difference between the two is the net income profit. All figures above are in terms of millions. Excel rounded the depreciation value which was 1.5 to 2 and net income of 1.5 to 2 as well which gave total expense of 11 which is actually 10.5 million. I will attempt to explain the major components of this Income Statement. Revenue is the first major component. The primary goal of a not-for-profit corporation is financial viability which is generally given in a mission statement in terms of service to the community (Gapenski, 2008). Because most not-for-profit establishments follow a tedious set of requirements, they usually have a tax-exempt status and can accept and or issue tax-exempt bonds (Gapenski, 2008). Revenues usually represent sales, but because there isn’t any clientele or shareholders, revenues must be re-invested into the company. In this case, revenues can be represented by donations, cash received, payer obligation, net patient service, interest earned on investments, and or rental income. Expenses would be the second component of my income statement. It is simply the cost of doing business. A company has to spend money in order to make money (Gapenski, 2008). Some examples of Brandywine expenses could include cost of sales such as utilities, buildings, salaries, labor, maintenance, administration expense, and depreciation and amortization. Net income is the last, but certainly not least. It is what is left after all expenses have been accounted for (Gapenski, 2008). It is often referred to as a...