Create a statement of cash flows fox Hospital XYZ, an investor-owned for-profit

Question

Create a statement of cash flows fox Hospital XYZ, an investor-owned for-profit Hospital with 5.000 outstanding shares of stock, for the year 2010 given the following list of activities Began 2010 with $150,000 in cash and cash equivalents Paid dividends of $10 per share Increase in accounts receivable of $10,000 Increase in accounts payable of $5,000 Sale of neighboring lot for $2,000,000 Expansion project costing $1,500,000 Issuance of 10-year bonds totaling $5,000,000. Purchase of new equipment totaling $4,000,000 Ratios Hospital XYZ has annual revenues of $100,000,000 and its current accounts receivable is $7,500,000 What is its days in patient accounts receivable, and what does this figure mean?

Explanation / Answer

3. cash flow from opearting activity

change in working capital

less: increase in accounts receivable -10000

Add: increase in accounts payable 5000

net cash inflow -5000

cash flow from investing activity

sale of neighboring 2000000

purchase of equipment -4000000

net cash inflow -2000000

cash flow from financing activity

dividend paid (5000sahres* $10) -50000

project cost expansion -1500000

Issue of bonds 5000000

net cash inflow 3450000

Net increase in cash and cash equivalent 1445000

add: cash and cash equivalent in beginning 150000

cash and cash equivalent in Ending 1595000

4. days in accounts receivable = number of days in year /   accounts receivable turnover ratio

   = 365 / 13.34

   = 27.36 days

   So, days in accounts receivable = 28 days

It means that the company takes 28 days to receive cash from the Receivable for credit sale.

Note:-

accounts receivable turnover ratio = net sale / average accounts receivable

   = 100000000 / (7490000 + 7500000)/2

   =100000000 / 7495000

   = 13.34

opening accounts recievable = closing average receivable - increase in receivables

= 7500000 - 10000

= 7490000   

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