Balance Sheet / Statement of Op. Assignment Case Study Solution
Financial Analysis of Sharpe Medical Center
In order to analyze the financial position of Sharpe Medical Center, we will examine the provided financial statements: the balance sheet (as of September 30, 20X1), the statement of operations (for the quarter ended September 30, 20X1), and the statement of changes in net assets (for the quarter ended September 30, 20X1).
Balance Sheet Analysis:
Assets:
Sharpe Medical Center's total assets amount to $633,200, which includes cash, accounts receivable, inventory, property, equipment, and investments. This suggests a substantial asset base, providing the company with the resources required for daily operations and potential investments in the future.
Liabilities:
Total liabilities are $344,600, composed of accounts payable, wages payable, and long-term debt. The relatively low level of liabilities compared to assets indicates a manageable debt load and suggests financial stability.
Equity:
With a total equity of $288,600, Sharpe Medical Center has a solid financial base. This equity is divided into net assets with donor restrictions and net assets without donor restrictions. The existence of equity indicates the company's net worth and its ability to withstand financial challenges.
Note: Refer to Exhibits for calculations
Statement of Operations Analysis:
Revenues:
The company generated $411,000 in revenues for the quarter, primarily from patient revenue (net of contractuals) and net assets released from donor restrictions. The substantial revenue demonstrates Sharpe Medical Center's ability to generate income effectively.
Expenses:
Total expenses for the quarter were $388,500, covering supply expense, depreciation, general expense, bad debt expense, interest expense, and labor expense. Effective expense management is crucial for maintaining profitability.
Net Income:
The medical center recorded a net income of $22,500 for the quarter. This positive net income reflects the company's ability to cover its expenses and generate a surplus, indicating profitability.
Note: Refer to Exhibits for calculations
Statement of Changes in Net Assets Analysis:
Net Assets with Donor Restrictions: The release of $9,000 in net assets from donor restrictions is a positive sign. It means that funds previously restricted for specific purposes are now available for general use, offering financial flexibility.
Net Assets without Donor Restrictions: The increase in net assets without donor restrictions from $250,000 to $264,600 demonstrates financial growth and stability. This surplus suggests that the company is generating a positive financial outcome.
Note: Refer to Exhibits for calculations
Summary of Financial Strength:
Sharpe Medical Center appears to be in a relatively healthy financial position based on the analysis of financial statements:
Profitability:
One of the key financial strengths of Sharpe Medical Center is its profitability. Sharpe Medical Center generated $411,000 in revenues during the quarter, primarily from patient revenue (net of contractuals) and net assets released from donor restrictions. This substantial revenue stream is a testament to the company's ability to effectively generate income. Patient revenue, in particular, forms the core of the company's income, highlighting its success in attracting patients and providing quality healthcare services.
Total expenses for the quarter amounted to $388,500, covering supply expense, depreciation, general expense, bad debt expense, interest expense, and labor expense. While expenses are necessary to maintain operations, Sharpe Medical Center has managed them effectively. The careful control of expenses is evident in the company's positive net income.
Sharpe Medical Center recorded a net income of $22,500 for the quarter, showcasing profitability. This positive net income reflects the company's ability to cover its expenses and generate a surplus, highlighting its financial strength.A positive net income is essential for sustaining operations and providing the resources required for future investments and growth.
Sharpe Medical Center's profitability is evident from the significant revenue it generates, effective expense management, and the positive net income. The company's financial statements demonstrate its ability to not only provide quality healthcare services but also operate profitably, which is vital for its sustainability and continued success in the healthcare industry...........
Balance Sheet Statement of Op. Assignment Case Study Solution
This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.
Related Case Solutions & Analyses:
Honda: Innovation The Chinese Way
Governance and Talent Management in a Professional Services Firm
Governance and Talent Management in a Professional Services Firm
Rudy Wong Investment Advisor
The Bottom-line Benefits of Ethics Code Commitment
Equity on Demand: The Netflix Approach to Compensation
Creating Value for Stakeholders
What is Strategic Management
Firm Strategy Vignettes
Finning International Inc.: Management Systems in 2009
