Assets Current Assets: Cash $2,737 Net premiums receivable 821 Supplies 387 Tota
ID: 2718308 • Letter: A
Question
Assets
Current Assets:
Cash $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 382
Total current liabilities $3,456
Long-term debt $4,295
Total liabilities $7,751
Net assets—unrestricted
(equity) $2,118
Total liabilities and net
Assets $9,869
a. How does this balance sheet differ from the one presented in Exhibit 4.1 for Sunnyvale?
b. What is BestCare’s net working capital for 2011?
c. What is BestCare’s debt ratio? How does it compare with Sunnyvale’s debt ratio?
XHIBIT 4.1 Sunnyvale Clinic alance Sheets December 31, ASSETS 2011 2010 Current Assets: $ 6,486 5,000 25.927 2,302 $ 39.715 $48,059 25.837 Cash and cash equivalents Short-term investments $ 12,102 10,000 28,509 3,695 $54,306 01l and 2010 Net patient accounts receivable in thousands) Inventories Total current assets Long-term investments Net property and equipment Total assets $52,450 $154,815 $ 25,837 $ 49.549 115,101 LIABILITIES AND EQUITY 2011 2010 Current Liabilities: $ 4,334 5,022 6,069 $15,425 $ 85,322 $100,747 $54,068 $154,815 $3.345 6,933 5,037 $ 15,315 $ 53,578 $68,893 $46,208 115,101 Notes payable Accounts payable Accrued expenses Total current liabilities Long-term debt Total liabilities Net assets (Equity) Total liabilities and equityExplanation / Answer
a)This balance sheet is for BestCare’s has total assets less than the one for Sunnyvale.The total %equity/assets is less for BestCare’s as compared to Sunnyvale’s.
b)BestCare’s net working capital for 2011=Total current assets - Total current liabilities
=3,945-3,456
=$489
c)BestCare’s debt ratio=Total Debt/Assets=7,751/9,869=0.785
Sunnyvale’s debt ratio for 2011=Total Debt/Assets=100747/154815=0.650
Thus debt ratio of Sunnyvale’s is less than the debt ratio of BestCare’s for 2011.