Suppose that two hospitals are identical in all ways except that Hospital N is r

Question

Suppose that two hospitals are identical in all ways except that Hospital N is relatively new while Hospital O is relatively old. Which of the following statements about a comparative financial statement analysis is most correct? (Hint: Think about the differences in the amount of net fixed assets carried on the balance sheet and the amount of depreciation expense reported on the income statement.) O A. Hospital N will report higher net income. O B. Hospital N will have higher total asset turnover. ° C. Hospital N will have higher fixed asset turnover. D. Hospital N will have lower gross fixed assets. 0 E. None of the above statements is correct. Reset Selection

Explanation / Answer

Ans is E None of the above statements are correct.

Explanation: Since new firm would have higher depreciation expense and resulting lower income, statement A is wrong, It would have higher gross fixed assets and total assets so statement B and C also incorrect. New hospital would have higher gross fixed assets so statement D is also incorrect.

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