Working Capital Financial Management Assignment Help

Best UK USA UAE Australia Canada China Working Capital Financial Management Assignment Help Service Online

 
1. Modern Medical Devices has a current ratio of 0.5. Which of the following actions would improve (i.e., increase) this ratio?
Use cash to pay off current liabilities.
Collect some of he current accounts receivable.
Use cash to pay off some long term debt.
Purchase additional inventory on credit (i.e., accounts payable).
Sell some of the existing inventory at cost.
 
2. Assume that the company has a current ratio of 1.2. Now which of the above actions would improve this ratio?
 
3. Consider the following financial statements for BestCare, HMO, a not for profit managed care plan:
BestCare HMO statement of operation and Change in Net Assest Year Ended June 30, 2011 (in tthousands)
Revenue
Premiums earned —$26,682
Co-Insurance——1,689
Interest and other income—-242
Total revenue——–$28,613
Expenses:
Salaries and benefits—-$15,154
Medical supplies and drugs—7,507
Insurance—–3,963
Provision for bad debts—-19
Depreciation—–367
Interest—–385
Total expenses—-$27,395
Net income——$1,218
Net assets, beginning of yr —$900
Net assets, end of yr—-$2,118
BestCare HMO
Balance Sheet
June 30, 2011 (in thousands)
Assets
Cash and cash equivalents $2,737
Net premiums receivable —821
Supplies—-387
Total current assets —-$3.945
Net property and equiment —$5,924
Total assets——-$9,869
Liabilities and Net Assets
Accounts payable-medical services $2,145
Accrued expenses –929
Notes payable—141
Current portion of long term debt–241
Total current liabilities—$3,456
Long term debt—$4,295
Total liabilities—-$7,751
Net assets (equity) $2,118
Total liabilities and net assets $9,869
a. Perform a Du Pont analysis on Best Care. Assume that the industry average ratios are as follows:
Total margin —3.8%
Total asset turnover—2.1
Equity multipier–3.2
Return on equity (ROE) 25.5%
b. Calculate and interpret the following ratios for BestCare: Industry Average
Return on assets (ROA) –8.0%
Current ratio—1.3
Days cash on hand –41 days
Average collection period—7days
Debt ratio—-69%
Debt to equity ratio–2.2
Times interest earned (TIE) ratio —2.8
Fixed asset turnover ratio—5.2
 

 
4. Consider the following financial statements for Green Valley Nursing Home, Inc., a for profit, long term care facility:
Revenue:
Net patient service revenue -$3,163,258
other revenue —106,146
Total revenues—-$3,269,404
Expense:
salaries and benifits $1,515,438
medical supplies and drugs—966,781
insurance and other—296,357
provision for bad debts—110,000
depreciation—85,000
interest —206,780
total expenses –$3,180,356
operating income—89,048
provision for income taxes—31,167
Net income–57,881
retained earnings, bginning of yr–$199,961
Retained earnings, end of yr –$257,842
Green Valley Nursing Home Balance Sheet
Assets
Current Assets:
Cash– $105,737
Marketable Securities –200,000
Net patient accounts receivable–215,600
suppliies–87,665
Total current assets—$608,992
Property and equipment $2,250,000
less accumulated depreciation–356,000
Net property and equipment–$1,894,000
Total assets $2,502,992
Liabilities and shareholders equity
Current Liabilities —
account payable—72,250
accrued expenses—192,900
notes payable—100,000
Current portion of long term debt–80,000
Total current liabilites–$445,150
Long term debt—$1,700,000
Shareholders’ Equity:
Common stock, $10 par value—$100,000
Retained earnings—257,842
Total Shareholders equity —357,842
Total liabilities and shareholder equity –$2,502,992
a. Perform a Du Pont analysi on Green Valley. Assume that the industry average ratios are as follows:
Total margin—3.5%
total asset turnover—1.5%
equity multiplier 2.5
Return on equity (ROE) 13.1%
b. Caluculate and interpret the following ratios:
—Industry Average
Return on assets (ROA) –5.2%
Current ratio —2.0
Days cash on hand—-22 days
Average collection period—19 days
Devt ratio—-71%
debt to equity ratio –2.5
Time interest earned (TIE) ratio—2.6
Fixed asset turnover ratio—1.4
c. assume that there are 10,000 shares of Green Vlleys stock outstanding an that some recently sold for $45 per share.
what is the firm’s price/earnings ratio?
What is its market/book ratio?
 
5. Examine the industry average ratios in problem 17.4 and 17.5. explain why the ratios are different between the managed care and nursing home industries.
 

Product Code: Fin-ch-77

 
Looking for Working Capital Financial Management Assignment Help , please submit your details here with product code mentioned above.