(Millions of Dollars)
CASH FLOW FROM OPERATIONS
Income from operations
$20.7
Depreciation expense
5.0
Increase in premiums receivable
(3.7)
Increase in medical costs payable
3.9
Increase in payables/accruals
1.9
Net cash flow from operations
$27.8
CASH FLOW FROM INVESTING
Fixed asset acquisitions
($6.7)
Increase in marketable securities
($18.2)
Net cash flow from investing
($24.9)
CASH FLOW FROM FINANCING
Decrease in long-term debt
(12.9)
Net cash flow from financing
($12.9)
Net increase (decrease) in cash
($10.0)
Beginning cash
37.2
Ending cash (calculated)
$27.2
Actual ending cash (Check figure)
$27.2
2. Use the Du Pont equation to obtain a rough feel for Commonwealth’s financial condition as compared to national averages. What are your conclusions? Du Pont Analyses:
2012
2013
Ind. Avg.
Total margin
3.67%
5.73%
2.90%
Total asset turnover
2.78
2.84
3.10
ROA = PM x TATO
10.21%
16.27%
8.99%
Equity multiplier
3.13
2.23
3.16
ROE = ROA x Equity multiplier
31.96%
36.32%
28.41%
ROE (Check figure)
31.96%
36.32%
3. Conduct a financial statement and operating indicator analysis and interpret the resulting data. Use both national and state competitor data in the analysis. (Note that all ratios do not have a complete set of comparative data.) Ratio Analyses:
Total Margin
2012
2013
Sparta
10.5%
Sparta
9.1%
Proxima
9.1%
Upper Quartile
5.5%
Upper Quartile
5.5%
WellLife
5.8%
WellLife
4.8%
Commonwealth 5.7%
State median
4.8%
State median
4.7%
State average
3.8%
Signet Healthcare
3.2%
Commonwealth
3.7%
Median
2.9%
Signet Healthcare
3.0%
Lower Quartile