# Kaplan Ha520 Week 3 Assignment

Pages: 2 (358 words) Published: December 17, 2012
3.5
a.
Brandywine Homecare
Statement of Income Year Ended December 31, 2007|
Revenue:|
Net service revenue| \$12,000,000|
Expenses:|
Other Than Depreciation (75% of revenue)| \$8,000,000| Depreciation Expense| \$1,500,000|
Net Income|
| \$2,500,000|

b. Net Income is \$2.5M as shown in part a. The Total Profit Margin is Net Income (\$2.5M)/ total revenues (\$12M) = Total Margin of 0.208 (20.8%). The cash flow is the net income plus the depreciation costs, thus \$1.5M (Depreciation Expense) + \$2.5M (Net Income) = Cash Flow of \$4.0M. c. If the depreciation expense doubled then the Net income would be reduced by an additional \$1.5M and the Net Income is \$1.0M. However the cash flow would stay the same because it consists of the new Net Income (\$1M) and the new Depreciation expenses (\$3M) combined for a new cash flow of \$4M. The new profit Margin is 0.083 (8.3%) = \$1M / \$12M d. If the depreciation was halved, Net Income would be \$3.2M. Cash Flow would be Net Income of \$3.2M + Depreciation of \$750K = \$4M Cash Flow. The profit margin is .267 (26.7%) = \$3.2M/\$12M 4.5

a. The Sunnyvale sheet looks at long-term investments and on a minor note it breaks down the property and equipment more thoroughly. b. The net working capital for 2007 is -\$489 (thousand). The Working Capital = Current Liabilities - Current Assets. Net Working Capital is -\$489K = \$3,456K - \$3,945K c. The Debt Ratio = Total Debt/Total Assets. The debt ratio for BestCare is .785 (78.5%) = \$7,751K/\$9,869K. Sunnyvale's is .65 (65%) = \$100,747K/154,815K. 4.6

a. In this problem, the stockholder equity added to the liabilities section to show the ownership portion of liabilities. b. The net working capital is negative \$163,842 = \$445,150 - \$608,992. c. The Green Valley's debt ratio is .857 (85.7%) = (445,150 + 1,700,000)/\$2,502,992. Of the three organizations, Green Valley is the highest on debt ratio with 85.7% when compared to BestCare at 78.5% and...