# Brandywine Homecare

Good Essays
1320 Words
Grammar
Plagiarism
Writing
Score
Brandywine Homecare
Brandywine Homecare, a not-for-profit business, had revenues of \$12 million in 2007. Expenses other than depreciation totaled 75 percent of revenues, and depreciation expense was \$1.5 million. All revenues were collected in cash during the year and all expenses other than depreciation were paid in cash.
1. Construct Brandywine’s 2007 income statement. An income statement, also known as a profit and loss statement shows how much money a company has spent over a period of time. It also shows the costs and expenses that are associated with earning that revenue. It is an important measure of the company’s profitability. The simple building blocks of a net income formula are revenues minus expenses equal net income.
Brandywine Homecare 2007 Income Statement
Total Revenue: \$12,000,000
Expenses: \$9,000,000
Depreciation Expense: \$1,500,000
Total Expenses: \$10,500,000
Net Income: \$1,500,000
2. What were Brandywine’s 2007 net income, total profit margin, and cash flow? As stated above, net income is the company’s total earnings.
Net income = Total revenue – Expenses
Net Income = \$12,000.000 - \$1,500,000 = \$1,500,000
Brandywine’s net income for 2007 was \$1,500,000. A profit margin is the difference between sales generated and the cost to produce each of the units sold. A profit margin refers to a measure of profitability and is an indicator of a company’s pricing strategy and how well it controls costs. Businesses pay especially close attention to profit margins because they can provide valuable information as to the financial condition of the company. Profit margins are presented in percentage terms.
Total Profit Margin = Net Income/ Total Revenues
Total Profit Margin= 1,500,000 / 12,000,000 = .125 = 12.5%
Brandywine’s total profit margin is 12.5%. This shows that Brandywine make 12.5 cents on every dollar of total revenues. A cash flow, also known as a cash flow statement simply reports the inflows and outflows of cash in a company.

References: Beginner’s Guide to Financial Statements. Retrieved on October 21, 2011 from: http://www.ifad.org/operations/pf/finance/audit/finance_guide.pdf Building an Income Statement. Retrieved on October 21, 2011 from: http://www.money-zine.com/Investing/Investing/Building-an-Income-Statement/ Gapenski, L. (2008). Healthcare Finance: An introduction to accounting and financial management (4th ed.). Chicago: AUPHA Press/ Health Administration Press. What is Profit Margin?. Retrieved on October 21, 2011 from: http:///.wisegeek.com/what-is-profit-margin.htm

## You May Also Find These Documents Helpful

• Good Essays

5. Profit margin is calculated by dividing (Points: 4) sales by cost of goods sold. gross profit by net sales. net income by stockholders' equity. net income by net sales.…

• 2410 Words
• 9 Pages
Good Essays
• Satisfactory Essays

Net profit margin of Barratt was 2.87% in 2013 and 9.67% in 2014 respectively. It means that in 2013 the company managed to transform 2.87% of its sales into net income and in 2014 it managed to transform already 9.67% of its sales into net income. In other words, in 2013 the company gained 2.87 pounds of net income per 100 pounds of revenue. In 2014 this number significantly increased and became 9.67 pounds of net income per 100 pounds of revenue. Persimmon had a higher net profit margin in 2013 and 2014 than Barratt and it was 12.33% and 14.45% respectively. So Persimmon earned 12.33 pounds of net income per 100 pounds of revenue in 2013 and 14.45 pounds of net income per 100 pounds of revenue in 2014.…

• 584 Words
• 3 Pages
Satisfactory Essays
• Better Essays

First, the income statement is used to express a firm’s revenues, gains, expenses, and losses. Revenue is the money earned from day to day business dealings within the company. The expenses that are located on the income statement are due to cost of operating a business. Companies balance out the equation on the income statement as follows revenues minus expenses equal net income. The income statement shows how much profit was earned by the company after all expenses have been taking out. If total expenses exceed total revenues, a net loss is reported on the income sheet.…

• 814 Words
• 4 Pages
Better Essays
• Satisfactory Essays

“Income Statement - The income statement shows the company’s revenues, expenses and net income during a specific period of time ("Boundless", 2014).” This statement is importing to the internal employees and investors/credits because it shows the profitability of the company.…

• 376 Words
• 2 Pages
Satisfactory Essays
• Powerful Essays

a.) The income statement, also called the profit & loss account (P & L), is used to illustrate a company’s revenues and expenses over a particular period of time. It shows the net profit and/or loss for the given period (the difference between the business’ total income and its total costs). It also allows shareholders to see the performance of the business and if it has made an acceptable profit.…

• 1098 Words
• 4 Pages
Powerful Essays
• Satisfactory Essays

The statement of cash flow is one of the main financial statements which investors rely on to measure a company’s financial strength. Some investors are very much interested in this statement because they absolutely want returns on their investment. The cash flow statement identifies the cash is flowing in and out of the company. If a company is consistently generating more cash than it is using, the company will be able to increase its dividends, reduce debt, and acquire other businesses. All of this is perceived to be good for investors.…

• 305 Words
• 2 Pages
Satisfactory Essays
• Good Essays

The Mental Health program for the Community Center has just completed its fiscal year end. The program director determines that his program has revenue for the year of \$1,210,000. He believes his variable expense amounts to \$205,000 and he knows his fixed expense amounts to \$1,100,000.…

• 318 Words
• 2 Pages
Good Essays
• Good Essays

Brandywine Homecare, a not-for-profit business, had revenues of \$12 million in 2007. Expenses other than depreciation totaled 75 percent of revenues, and depreciation expense was \$1.5 million. All revenues were collected in cash during the year and all expenses other than depreciation were paid in cash.…

• 870 Words
• 4 Pages
Good Essays
• Satisfactory Essays

The statement of cash flow helps determine the change in where cash comes in and cash equivalents are turned into cash, which includes cash on hand and cash that is due to come in (Zion Bank). For my company the statement of cash flow will help summarize the cash that has come in for that year and what has been lost due to depreciation of equipment and funds.…

• 363 Words
• 2 Pages
Satisfactory Essays
• Powerful Essays

Gapenski, L. C. (2008). Healthcare Finance. Health Administration Press and Association of University Programs in Health Administration.…

• 1459 Words
• 6 Pages
Powerful Essays
• Best Essays

Gapenski, L.C. (2012). Healthcare finance: an introduction to accounting and financial management (5th ed.). Chicago, IL: Health Administration Press.…

• 2042 Words
• 9 Pages
Best Essays
• Good Essays

The cash flow statement reports a company’s inflow and outflow of cash. While an income statement provides the information about whether or not a company made a profit, a cash flow statement can tell you whether the company generated cash. The cash flow statement also provides information regarding investing and financing activities that do not require the consumption of cash. All of these aspects are important for a company management to monitor because they all have such a strong effect on the financial health of the company. The examination of the cash flow statement should be a high priority for potential investors; the amount of money that flows in and out of a company is something that investors might want to monitor.…

• 780 Words
• 4 Pages
Good Essays
• Good Essays

Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Tootsie Roll has Net Sales of \$499,331 and a Net Income of \$53,475 giving them a 10.7% Profit Margin Ratio resulting in 11 cents of every dollar of sales resulted in Net Income for 2009. The Hershey Company has Net Sales of \$5,298,668 and a Net Income of…

• 505 Words
• 3 Pages
Good Essays
• Powerful Essays

An income statement reports the profitability of the business operations for a stated period of time. It tells the uses how much revenues were earned by the business and how much expenses were incurred. The difference between the revenues and the expenses is called the net income or net loss. There is net income if the revenues exceed the expenses and a net loss if expenses exceed the revenues.…

• 2006 Words
• 9 Pages
Powerful Essays
• Good Essays

If EBIT amounted to \$200,000 and sales equaled \$1 million, the operating profit margin would be 20%.…

• 1201 Words
• 5 Pages
Good Essays