Brandywine Clinic, a not-for-profit business, had revenues of $12 million in 201

Question

Brandywine Clinic, a not-for-profit business, had revenues of $12 million in 2012. 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. a. Construct Brandywine's 2012 income statement. b. What were Brandywine's net income, total profit margin, and cash flow? c. Now, suppose the company changed its depreciation calculation procedures (still within GAAP) such that its depreciation expense doubled. How would this change affect Brandywine's net income, total profit margin, and cash flow? d. Suppose the change had halved, rather than doubled, the firm's depreciation expense. Now, what would be the impact on net income, total profit margin, and cash flow?

Explanation / Answer

b

c

d

Brandywine Homecare
Income statement Month ending December 31, 2012 Revenue 12000000 Total revenue 12000000 Expenses Depreciation 1500000 Other    9000000 Total expenses 10500000 Net income or Profit 1500000

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