Balance Sheet analysis to explain significant changes
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I am trying to understand this balance sheet. An analysis is needed.
Balance Sheet
2009 2008 Difference % Change
Cash and Cash Equivalents $22,995 $41,851 ($18,856) -45%
Assets of Limited Use $27,594 $41,851 ($14,257) -34%
Patient Accounts Receivable (1) $58,787 $37,666 $21,121 56%
(net of Allowance for Bad Debts
2009: $11,757 / 2008: $7,533)
Other Receivables (3rd party payer settlements - $87 ($87) -100%
Inventories $18,396 $8,370 $10,026 120%
Prepaid Expenses $95 $201 ($106) -53%
Total Current Assets $127,867 $130,026 ($2,159) -2%
Other Assets
Funded Depreciation $137,970 $167,404 ($29,434) -18%
Held under Bond Indenture $73,584 $75,332 ($1,748) -2%
Property, Plant and Equipment, net $248,346 $175,774 $72,572 41%
Total Assets $587,767 $548,535 $39,232 7%
Liabilities and Equity
Current Liabilities
Current portion of long-term debt $14,599 $4,185 $10,414 249%
Accounts payable, accrued expenses $9,198 $4,185 $5,013 120%
Bond interest payable $10 $10 $0 0%
Total Current Liabilities $23,807 $8,380 $15,427 184%
Other Liabilities
Long term debt $452,945 $209,255 $243,690 116%
less: current portion of long term debt $14,599 $4,185 $10,414 249%
Net long term debt $438,346 $205,069 $233,277 114%
Total Liabilities $462,153 $213,450 $248,703 117%
Equity
Common Stock, $ 0.01 par value $50 $50 0%
10,000,000 shares authorized
5,000,000 shares outstanding
Additional Paid-in Capital
Retained Earnings (or "Net Worth" or "Unrestricted Fund Balance") $125,564 $335,035 ($209,471) -63%
Total Liabilities and Equity $587,767 $548,535 $39,232 7%
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Solution Summary
The 531 word solution discusses eight possible actions that may have occurred to explain the reasons for negative impacts to the comparative balance sheet.
Solution Preview
With my auditor hat on, here is what I suspect may be happening with this organization. Of course, deeper investigation would confirm or refute my assumptions:
1. The decrease in cash is within a normal range and not significant.
2. The decrease in assets of limited use would suggest that assets were sold (and would be disclosed on the income statement).
3. The growth in accounts receivable could be either a sign of the poor economy or a growth in revenue, or both.
4. An increase in inventory could be related to the increase in accounts receivable - either growth in revenue or slower use of supplies than anticipated.
5. The decrease in depreciation is curious when we note than total PP&E increased by $72,572. The relationship between those two amounts is odd ...
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