Mmha6160 week 3_17.4. bestcare hmo statement of operations and

MMHA6160  Week 3_17.4.

Connect with a professional writer in 5 simple steps

Please provide as many details about your writing struggle as possible

Academic level of your paper

Type of Paper

When is it due?

How many pages is this assigment?


BestCare HMO

Statement of Operations and Change in Net Assets

Year Ended June 30, 2011



                Premiums earned                                                                            $26,682

                Co-insurance                                                                                         1,689

                Interest and other income                                                                  242

                     Total revenue                                                                               $28,613



                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 year                                                                     $    900


Net assets, end of year                                                                                 $ 2,118




















BestCare HMO

Balance Sheet

June 30, 2011



                Cash and cash equivalents                                                           $2,737

                Net premiums receivable                                                                  821

                Supplies                                                                                                    387   

                                Total current assets                                                                        $3,945


                Net property and equipment                                                     $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 BestCare. Assume that the industry average ratios are as follows:

Total margin                                       3.8%

Total asset turnover                       2.1

Equity multiplier                               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                                                    7 days

                Debt ratio                                                                                  69%

                Debt-to-equity ratio                                                             2.2

                Times interest earned (TIE) ratio                                   2.8

                Fixed asset turnover ratio                                                  5.2