The financial information presented below for ABC Healthcare that was filed with
ID: 2446128 • Letter: T
Question
The financial information presented below for ABC Healthcare that was filed with the Department of Insurance. Use this data to help complete problems 1-3.
Current Year Previous Year
Cash and Short-Term Investments $34,094,076 $11,863,992
Receivables 13,036,037 15,112,834
Other Current Assets 3,650,374 6,306,384
Total Current Assets $50,780,487 $33,283,210
Long-Term Investments $134,233,202 $126,679,509
Property, Plant, and Equipment 1,108,330 2,216,891
Total Assets $186,122,019 $162,179,610
Current Liabilities $70,301,625 $66,950,203
Other Liabilities 4,017,789 3,949,442
Net Worth 111,802,605 91,279,965
Total Liabilities and Net Worth $186,122,019 $162,179,610
Member Months 4,820,351 4,721,314
Premium Revenue $512,600,104 $515,079,684
Medicaid Revenue 58,969,632 63,979,870
Investment Income 8,637,915 6,640,969
Total $580,207,651 $585,700,523
Physician Services 157,313,074 148,868,294
Other Professional 23,733,163 21,526,611
Inpatient 110,813,471 113,989,688
Incentive Pool 1,834,583 4,677,527
Outpatient 103,981,202 97,746,260
Pharmacy 62,764,866 67,567,497
Access Fees 341,685 402,285
Reinsurance 2,321,544 1,682,121
Coordination of Benefits (434,217) (80,097)
Total Medical & Hospital $462,669,371 $456,380,186
Administration 76,772,846 76,807,222
Total Expenses $539,442,217 $533,187,408
Income Before Tax 40,765,434 52,513,115
Tax 12,685,285 17,682,052
Net Income $28,080,149 $34,831,063
2. a.Why did investment income increase in the current year?
b.What was the average yield on cash and investments during the current year?
c.Net Worth increased by $20,522,640 during the current year, but Net Income was $28,080,149. What might have accounted for this difference?
Current Year Previous Year
Cash and Short-Term Investments $34,094,076 $11,863,992
Receivables 13,036,037 15,112,834
Other Current Assets 3,650,374 6,306,384
Total Current Assets $50,780,487 $33,283,210
Long-Term Investments $134,233,202 $126,679,509
Property, Plant, and Equipment 1,108,330 2,216,891
Total Assets $186,122,019 $162,179,610
Current Liabilities $70,301,625 $66,950,203
Other Liabilities 4,017,789 3,949,442
Net Worth 111,802,605 91,279,965
Total Liabilities and Net Worth $186,122,019 $162,179,610
Member Months 4,820,351 4,721,314
Premium Revenue $512,600,104 $515,079,684
Medicaid Revenue 58,969,632 63,979,870
Investment Income 8,637,915 6,640,969
Total $580,207,651 $585,700,523
Physician Services 157,313,074 148,868,294
Other Professional 23,733,163 21,526,611
Inpatient 110,813,471 113,989,688
Incentive Pool 1,834,583 4,677,527
Outpatient 103,981,202 97,746,260
Pharmacy 62,764,866 67,567,497
Access Fees 341,685 402,285
Reinsurance 2,321,544 1,682,121
Coordination of Benefits (434,217) (80,097)
Total Medical & Hospital $462,669,371 $456,380,186
Administration 76,772,846 76,807,222
Total Expenses $539,442,217 $533,187,408
Income Before Tax 40,765,434 52,513,115
Tax 12,685,285 17,682,052
Net Income $28,080,149 $34,831,063
Explanation / Answer
a. Investment income is increased in the current year because of the income generated through short term investment which has been increased from 11,863,992 to 34,094,076 this year.
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