bestcare hmo statement operations and change net assets year ended june 30 2004 thousands re

Based on the information below answer the two questions. 1. Perform a Du Pont analysis on BestCare. Assume that the industry average ratios are as follows: Total margin- 3.8% Total asset turnover- 2.1 Equity multiplier- 3.2 Return on equity- 25.5% 2. Calculate and interpret the following ratios for BestCare: Industry Average Return on assets- 8.0% Current ratio- 1.3 Days cash on hand- 41 days Average collection period- 7 days Debt ratio- 69% Debt-to-equity ratio- 2.2 Times interest earned ratio- 2.8 Fixed asset turnover ratio- 5.2 BestCare HMO Statement of Operations and Change in Net Assets Year Ended June 30, 2004 (in thousands) Revenue: Premiums earned $26,682 Co-insurance 1,689 Interest and other income 242 Total revenue $28,613 Expenses: Salaries and benefits $15,154 Medical supplies and drugs 7,507 Insurance 3,963 Provision for bad debts 19 Depreciation 367 Interest 385 Total expenses $27,395 556 Healthcare Finance Net income $ 1,218 Net assets, beginning of year $ 900 Net assets, end of year $ 2,118 BestCare HMO Balance Sheet June 30, 2004 (in thousands) Assets Cash and cash equivalents $ 2,737 Net premiums receivable 821 Supplies 387 Total current assets $ 3,945 Net property and equipment $ 5,924 Total assets $ 9,869 Liabilities and Net Assets Accounts payable–medical services $ 2,145 Accrued expenses 929 Notes payable 141 Current portion of long-term debt 241 Total current liabilities $ 3,456 Long-term debt $ 4,295 Total liabilities $ 7,751 Net assets (equity) $ 2,118 Total liabilities and net assets $ 9,869