Statement of Income Year Ended December 31, 2007
Net service revenue
Other Than Depreciation (75% of revenue)
| Depreciation Expense
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...
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