Assets Current Assets: Cash $2,737 Net premiums receivable 821 Supplies 387 Tota

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 equity

Explanation / 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.

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