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Franklin Healthcare reported revenues of $1,500 million in 2

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Franklin Healthcare reported revenues of $1,500 million in 2010 and $1,250 million in 2011. The revenue streams were comprised of 25% patient revenue, 50% third-party revenue, and the remaining 25% was a combination of grants and investments. The hospital spent $25 thousand in marketing for each of the past two years. The average daily patient population ranged from 500 in 2010 to 400 patients in 2011.

Franklin reported operating expenses and depreciation of $500 thousand in 2010 but due to layoffs and reorganization operating expenses decreased by $200 thousand in 2011. Hospital administration anticipates little growth in patient population in the coming year and will likely need to invest in new equipment. The nonprofit facility pays no shareholder dividends or taxes.

Construct an income statement based on the information provided in the scenario.

2. Discuss your suggestions to the Williams Foundation based on your interpretation of the income statement. Is the facility financially healthy? Should the Foundation reconsider their grant?

http://www.investopedia.com/terms/b/balancesheet.asp#axzz1iSGFwMkB

http://www.investopedia.com/articles/04/022504.asp#axzz1iSGFwMkB

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Solution Summary

Franklin Healthcare reported revenues of $1,500 million in 2010 and $1,250 million in 2011. The revenue streams were comprised of 25% patient revenue, 50% third-party revenue, and the remaining 25% was a combination of grants and investments. The hospital spent $25 thousand in marketing for each of the past two years. The average daily patient population ranged from 500 in 2010 to 400 patients in 2011.

Franklin reported operating expenses and depreciation of $500 thousand in 2010 but due to layoffs and reorganization operating expenses decreased by $200 thousand in 2011. Hospital administration anticipates little growth in patient population in the coming year and will likely need to invest in new equipment. The nonprofit facility pays no shareholder dividends or taxes.

Construct an income statement based on the information provided in the scenario.

2. Discuss your suggestions to the Williams Foundation based on your interpretation of the income statement. Is the facility financially healthy? Should the Foundation reconsider their grant?

Solution Preview

FRANKLIN HEALTHCARE
INCOME STATEMENT
12/31/2011

Revenue:

Patient Revenue $312,500
Third-party Revenue 625,000
Grants and Investment Revenue 312,500

Total Revenue 1,250,000

Expenses:

Marketing ...

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