Using the 2005 and 2006 Statement of Financial Position (SFP) and the Statement of Earnings (SE) found on pages 465 and 466, complete a vertical analysis (common-sized statements) for both years and a horizontal analysis (trend) from 2005 to 2006.Please show work.......thanks
Table13:1
Bayside Memorial Hospital Statements of Operations (Income Statements) Years Ended December 31, 2006 and 2005 (Thousands of dollars 2006 2005
Net Patient Service Revenue $108,600 $97,393
Premium revenue 5,232 4,622
Other revenue $ 3,644 6,014
Total revenues $117,476 $108,029
Expense:
Nursing Services $58,245 56,752
Dietary Services 5,424 4,718
General services 13,198 11,655
Administrative services 11,427 11,585
Employee health and welfare 10,250 10,705
Provision for uncollectible 3,328 3,469
Provision for malpractice 1,320 1,204
Depreciation 4,130 4,025
Interest expense 1,542 1,521
Total Expense $108,904 $105,634
Net Income $8,572 $2,395
Balance Sheet
Table 13.2 contains Bay side’s 2005 and 2006 balance sheets. Although the assets are all stated in terms of dollars, only cash represents actual money we see that bayside can if it liquidated its short-term investment securities. Write checks at the end of 2006 for a total $6,263,000 (verse total current liabilities of $13,332,000 due during 2006). The noncash current assets will presumably be converted to cash within a year, but they do not represent cash on hand.
Then Claims against assets are two types: 1) liabilities, or money the firm owes, and 2) equity, also called net assets or fund capital. Equity is a residual, so for 2006
Assets -Liabilities = Equity
151,278,000 - ($13,332,000+$30,582,000) =$107,364,000
Liabilities consist of $(13,332,000 of current liabilities plus $30,582,000of long-term liabilities. If assets decline in value-suppose some of Bayside’ s fixed assets were sold at less that book value-liabilities remain constant, so the value of the equity capital declines.
Table 13:2 Bayside Memorial Hospital Balance Sheets December 31, 2006 and 2005 (thousand of dollars)
2006 2005
Cash $4,263 $5,095
Short-term investments 2,000 0
Accounts receivable 21,840 20,738
Inventories 3,177 2,982
Total current assets $31,280 $28,815
Gross plant and equipment $145,168 $140,865
Accumulated depreciations 25,160 21,030
Net plant and equipment $119,998 $119,835
Total assets $151,278 $148,650
Accounts payable $4,707 $5,145
Accrued expenses 5,650 5,421
Notes payable 825 4,237
Current portion of long-term debt 2,150 2,000
Total current liabilities $13,332 $16,803
Long-term debt $28,750 $30,900
Capital lease obligations 1,832 2,155
Total long-term liabilities $30,582 $33,055
Net assets (equity) $107,364 $98,792
Total liabilities and net assets $151,278 $148,650
