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Interpreting hospital financial statements
Financial statement question
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Balance Sheet A balance sheet is an educational, financial tool that summarizes a company’s assets, liabilities, and net worth during a particular time frame. The data provided by the balance sheet informs the organizational leaders of the financial status of the firm. Moreover, the balance sheet displays what the company owns and owes (Edmonds, Tsay, & Olds, 2011). Completing as well as understanding the numbers is equally as critical as the meaning behind the figures. The bookkeeper for Lowell’s Country Music Bar left an incomplete balance sheet. The individual knows the firm has a working capital of $90,000 and its debt to assets ratio is 40%. Upon completing the manual calculations, one will explain the calculation for each answer in support …show more content…
This number is obtained by adding cash, accounts receivable, inventory prepaid expenses. $21,000 + $42,000 + $64, 500 + $9,000 = $136,500. The answer for letter D is $346,500 total assets. Total assets equal total C.A. + T. F. A. denoting, $136,500 + $210,000. The answer for letter E is $15,000 for accounts payable. The amount is calculated by subtracting total current liabilities – income tax payable-notes payable. ($37,500 -$10,500 - $12,000). Additional, a person can calculate for the letter G. The person knows the debt to assets ratio is 40% since it is given in the problem. The debt to asset ratio equals total debt / total assets. Impling, .40 X $346, 500 = $138,600 in total …show more content…
An individual knows the current liability is $37,500 and the total debt is $138,600. Therefore, the person would subtract the amount of $138,600 - $37, 500. The answer for letter H is $102,900 for retained earnings. The common stock is $105,000. Consequently the Total Equity is $207,900 - $105, 000. The answer for the letter I is $207, 900 for total stockholders’ equity. One can use the formula I (Total Stockholders Equity) = J ($346,500 Total Liabilities and Stockholder equity) – G ( $138,600 Total Liabilities). The answer for J is $ 346,500 for Total Liabilities and Stockholder’s Equity. The calculation principle used is total assets = ($138,600) total liability + ($207, 900) equity. Concluding the Lowell’s Country Music Bar Balance Statement Sheet balances out in the current assets plus its total liabilities. Below is the calculated Excel Spreadsheet used to acquire values for the letters A-J. Although the data revealed these numbers on the balance sheet. There may always be room for error even when using Excel spreadsheets for calculations (Levy,
Net working capital represents organization’s operating liquidity. In order to compute the net working capital, total current assets are divided from total current liabilities. When there is sufficient excess of current assets over current liabilities, an organization might be considered sufficiently liquid. Another ratio that helps in assessing the operating liquidity of as company is a current ratio. The ratio is calculated by dividing the total current assets over total current liabilities. When the current ratio is high, the organization has enough of current assets to pay for the liabilities. Yet, another mean of calculating the organization’s debt-paying ability is the debt ratio. To calculate the ratio, total liabilities are divided by total assets. The computation gives information on what proportion of organization’s assets is financed by a debt, and what is the entity’s ability to pay for current and long term liabilities. Lower debt ratio is better, because the low liabilities require low debt payments. To be able to lend money, an organization’s current ratio has to fall above a certain level, also the debt ratio cannot rise above a certain threshold. Otherwise, the entity will not be able to lend money or will have to pay high penalties. The following steps can be undertaken by a company to keep the debt ratio within normal
In order to determine the value of operations, and using proforma income statement and balance sheet statement, Cash flow statement was formulated for the next 5 years. The Account Receivables plus the Inventory minus the Account Payable was determined as Net Operating Working Assets. An organization cost of 0,000 was amortized over the 5-year period.
1. As of December 31, Mesa Company has a balance of $5,000 in accounts receivable of which $500 is
11a. Answer: (Book Value WACC) Debt = 61.2 / 155.7 = 39% Preferred Stock = 15 / 155.7 = 10% Common Stock = 79.5 / 170.8 = 51% 2. Answer: (Market Value WACC) Debt = 30% Preferred Stock = 10% Common Stock = 60% C. Answer: Weighted Average Cost of Capital determines marginal cost of issuing new securities to finance projects. Such securities should be issued at market value. Therefore weights allocated to debt and equity in determining WACC should be based on market value.
When Mr. Kay calculated the financial ratios, he realized that the debt ratio of Huggy Bear Toys was different than the industry average. Therefore, he wants to know what the growth rate of the company would be if the debt ratio of Huggy Bear Toys were equal to the debt ratio of the industry (45%). To be able to calculate that growth rate, you need to find the new income statement and balance sheet items by taking into account the information provided below. If no information is given about an income statement or balance sheet item, assume that this item is not going to change.
As of December 26, 2004, our liquid assets totaled $10,924,000. These assets consisted of cash and cash equivalents in the amount of $10,642,000 and short-term investments in the amount of $282,000. The working capital deficit increased slightly from $50,359,000 as of December 28, 2003 to $51,041,000 as of December 26, 2004. This increase was due primarily to increases in the loss reserve and unearned premiums related to the captive insurance subsidiary and accounts payable and was partially offset by increases in inventories and receivables.
In “Bank Debt” alternative, a sum of $3.5 million will be injected to the company through bank loans. However, the company will have to pay an additional amount of $33,750 in interest and a principal payment of $300,000 to the bank annually over the course of 7 years. Net income will come to $489,187.50 and EPS will be 0.49.
Operating assets decrease to 2.54%. Decrease in Operating Asset concludes that company saved $ 134, 5 million in 1996. The sales in proportion to percentage between total sales in 1995 to 1996 times with the percentage of operating assets in 1995 were amounted $ 582 million. Since $ 582 is the total amount required, company had saved up to $ 134, 5 million. Total amount have required sums up to $ 582 - $ 134, 5 = $ 447, 5 million as the required amount to sustain its growth.
Other 0 0 0 Total Disbursements 4,982.00 5,127.00 5,170.00 Cash Surplus 10,758.00 19,086.00 29,586.00 Add: a. Short Term Loans 0 0 0 Long Term Loans 0 0 0 Capital Stock Issues 0 0 0
...le payment for the loan is made $9,000 while owner has drawn almost $45,000 during the year. The business is attaining breakeven in the sixth month of its operations. (Please see Annex II for details).
George’s Trains working capital is unique in every way, but there is a difference between its total current assets and total current liabilities. Since the total current assets is more than the total current liabilities, then George’s Trains net working capital will be positive instead of being negative. Then there is a fair amount of contribution this firm has as of made by the owner. With carefully looking at the video more than once, I notice how slowly the business activity for George’s Trains improved with him offering certain days of credit to c...
The capital structure of a firm is the way in which it decides to finance its operations from various funds, comprising debt, such as bonds and outstanding loans, and equity, including stock and retained earnings. In the long term, firms seek to find the optimal debt-equity ratio. This essay will explore the advantages and disadvantages of different capital structure mixes, and consider whether this has any relevance to firm value in theory and in reality.
Maintaining a company’s financial assets is a daunting task. Cash management techniques and short-term financing provide accounting executives with the tools needed to survive the constant changes within the economy. The combination of these tools and the knowledge of the world economy will assist companies in maintaining current assets and facilitates growth.
It directly affects the profitability and liquidity of firms (Raheman and Nasr, 2007). The profitability liquidity tradeoff is important because if working capital management is not given due considerations then the firms are likely to fail and face bankruptcy (Kargar and Bluementhal, 1994). The significance of working capital management efficiency is irrefutable (Filbeck and Krueger, 2005). Working capital is known as life giving force for any economic unit and its management is considered among the most important function of corporate management. Every organization whether, profit oriented or not, irrespective of size and nature of business, requires necessary amount of working capital. Working capital is the most crucial factor for maintaining liquidity, survival, solvency and profitability of business (Mukhopadhyay, 2004). Working capital management is one of the most important areas while making the liquidity and profitability comparisons among firms (Eljelly, 2004), involving the decision of the amount and composition of current assets and the financing of these assets. The greater the relative proportion of liquid assets, the lesser the risk of running out of cash, all other things being equal. All individual components of working capital including cash, marketable securities, account receivables and inventory management play a vital role in the performance of any firm. Shin and Soenen, (1998) argued that efficient working capital management is very important to create value for the shareholders while Smith et. al., (1997) emphasized that profitability and liquidity are the salient goals of working capital management. Considering the importance of working capital management the researchers focused on evaluating the working capital management and profitability relationship such as Uyar,
The balance sheet shows in the business of the company at some point, usually the end of the financial year. I t shows the balance list of assets, liabilities, and Stockholders' equity arranged on a prescribed date. Usually, this date is the last time day of the accounting period.