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Financials of a company

Having trouble with financial in this problem.

HCM 3005
Nurse-at home final project assignments

Nurse-at-Home, Part I
Nurse-at-Home is a for-profit company that provides long-term placement of nursing aides in private residences.
Download the December 31, 2003 and 2004 unadjusted trial balances for the company.

Nurse-at-Home Nurse-at-Home
Unadjusted Trial Balance Unadjusted Trial Balance
31-Dec-03 31-Dec-04
DEBIT CREDIT
Current Assets: Current Assets: DEBIT CREDIT
Cash $ 35,000 Cash $ 50,000
Allowance for Doubtful Accounts $ 10,000 Allowance for Doubtful Accounts $ 15,000
Accounts Payable 50,000 Accounts Payable 50,000
Income Taxes Payable 3,000 Income Taxes Payable 5,000
Note Payable (Long Term) - Bank 25,000 Note Payable (Long Term) - Bank 20,000
Bad Debt Expense 13,000 Bad Debt Expense 15,000
Retained Earnings 25,000 Retained Earnings 47,000
Marketing Expenses 85,000 Marketing Expenses 75,000
Depreciation Expense 5,000 Depreciation Expense 6,000
Salaries Expense 345,000 Salaries Expense 355,000
Administrative Expenses 42,000 Administrative Expenses 35,000
Prepaid Expenses 5,000 Prepaid Expenses 10,000
Interest Expenses 3,000 Interest Expense 2,000
Property, Plant and Equipment 70,000 Property, Plant and Equipment 75,000
Accumulated Depreciation 5,000 Accumulated Depreciation 11,000
Client Revenue 518,000 Client Revenue 530,000
Accounts Receivable 75,000 Accounts Receivable 95,000
Common Stock (10,000 shares - Common Stock (10,000 shares -
$1 par value - issued and outstanding) 10,000 $1 par value - issued and outstanding) 10,000
Additional Paid-in-Capital 35,000 Additional Paid-in-Capital 35,000
Income Taxes 3,000 Income Taxes 5,000
$ 681,000 $ 681,000 $723,000 $723,000

Using the information in the unadjusted trial balances, create a Balance Sheet and Statement of Income for Nurse-at-Home as of December 31, 2003 and 2004.

Nurse-at-Home Nurse-at-Home
Balance Sheet Statement of Income
December 31, For the Years Ended December 31,

ASSETS 2003 2004 2003 2004
Revenues:
Current Assets: $ - $ -
$ - $ -
Expenses:
$ - $ -
Total Current Assets $ - $ -

Fixed Assets:
$ - $ -
Less:
Net Fixed Assets $ - $ -
Total Expenses $ - $ -
Total Assets $ - $ -
Net Income $ - $ -

LIABILITIES AND EQUITY 2003 2004

Current Liabilities:
$ - $ -

Total Current Liabilities $ - $ -

Long-term Debt:
$ - $ -

Total Liabilities $ - $ -

Stockholders' Equity:
$ - $ -

Current Net Income
Total Equity $ - $ -

Total Liabilities and Equity $ - $ -

Discuss the financial condition of Nurse-at-Home. Has the company's profitability increased or decreased from 2003 to 2004? If yes, how much and what components (i.e., revenues and/or expenses) caused the increase or decrease in net income?
Have the company's total assets increased or decreased from 2003 to 2004? What components of total assets caused the change?
Have the company's total liabilities increased or decreased from 2003 to 2004? What components of total liabilities caused the change?
Has the company's total equity changed from 2003 to 2004? What components of total equity caused the change?

Nurse-at-Home, Part II
Using the previously created Balance Sheets as of December 31, 2003 and 2004, and the Statement of Income for the year ended December 31, 2004; create a Statement of Cash Flow for Nurse-at-Home for the year ended December 31, 2004.
Nurse-at-Home Company
Statement of Cash Flow
For the Year Ended December 31, 2004

Cash Flows from Operating Activities:
Net Income $ -
Adjustments:

Net Cash from/to Operations $ -

Cash Flows from/to Investing Activities:
$ -

Cash Flow from/to Financing Activities:
$ -

Net Increase (Decrease) in Cash $ -

Cash, Beginning of Year

Cash, End of Year $ -

Discuss the 2004 Statement of Cash Flow of Nurse-at-Home. Did the company's cash position increase or decrease from 2003 to 2004? Did the company's operating activities generate positive cash flow? If yes, which components of operating activities generated cash flow? Which area(s) utilized the company's cash flow? How much? Why? Write answers in an MS Word document.

Nurse-at-Home, Part III
Use the Balance Sheet and Statement of Income created for Nurse-at-Home in Part I. Using Excel prepare a vertical analysis of the company for the years 2003 and 2004 and a horizontal analysis from 2003 (base year) to 2004 (subsequent year).
Discuss your findings. Here are a few, but not all, the questions you should consider.
? Is the company growing?
? What line items reflected the largest percentage increases and/or decreases?
? Discuss the financial impact these changes have on the company's financial viability currently and in the future.

Nurse-at-Home, Part IV
Use the Balance Sheets and Statements of Income for Nurse-at-Home.
Prepare a ratio analysis of the company for the years 2003 and 2004, using at least one profitability, liquidity, capital structure, and activity ratio.
Discuss your findings. In what areas has the company improved? In what areas has the company's financial condition weakened? Why?
Explain your selection of ratios. Why did you choose these ratios?

Profitability ratio: <Enter the name of the ratio>

Data: <Enter the relevant data from the financial statements.>

Ratio: <Enter the value>

Interpretation: <Enter your evaluation of the company.>

Reasons for selecting this ratio: <Explain why you chose this ratio.>

Liquidity ratio: <Enter the name of the ratio>

Data: <Enter the relevant data from the financial statements.>

Ratio: <Enter the value>

Interpretation: <Enter your evaluation of the company.>

Reasons for selecting this ratio: <Explain why you chose this ratio.>

Capital structure ratio: <Enter the name of the ratio>

Data: <Enter the relevant data from the financial statements.>

Ratio: <Enter the value>

Interpretation: <Enter your evaluation of the company.>

Reasons for selecting this ratio: <Explain why you chose this ratio.>

Activity ratio: <Enter the name of the ratio>

Data: <Enter the relevant data from the financial statements.>

Ratio: <Enter the value>

I nterpretation: <Enter your evaluation of the company.>

Reasons for selecting this ratio: <Explain why you chose this ratio.>

Assignment 3: Course Project?Nurse-at-Home, Part V

Variances

Use the following information for Nurse-at-Home, and answer the questions.

Year: 2004 Static Budget Flexible Budget Actual Budget
Revenues $535,000 $540,000 $530,000
Expenses $480,000 $480,000 $488,000
Profits $55,000 $60,000 $42,000

Calculate and interpret the profit variance.

Calculate and interpret the revenue variance.

Calculate and interpret the cost variance.

Calculate and interpret the volume and price variances on the revenue side.

Calculate and interpret the volume and management variances on the cost side.

Discuss your overall findings for the operations of Nurse-at-Home for 2004.

Nurse-at-Home, Part VI
The president of Nurse-at-Home is considering accepting Medicare patients next year. However, to do so she must begin to use RNs for client visits, which Medicare reimburses at $45 per visit. An RN costs $35 per hour versus the current cost of $15 for an LPN or nurses' aide. The president believes she can increase her patient visits by 15% by accepting Medicare patients. She is also aware that if she begins accepting Medicare patients, the company's administrative costs will increase by approximately $10,000 per year because of the claims file complexity.
Using the Statement of Income created for the year 2004 in Part I, what is the company's current level of client visits (assuming each visit is equal to one hour of salary costs)? How many more visits will the company generate if it accepts Medicare patients? What would be the estimated profit or loss associated with the Medicare service line?
Would you recommend that Nurse-at-Home begin accepting Medicare patients? Why or why not?

Attachments

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