Brandywine Homecare

Health Economic Management – HAS 525

October 20, 2011

Bandywine Homecare, a not-for-profit business, had earnings of \$12 million in 2007. Expenses

other than depreciation totaled 73% percent of revenues, and depreciation expenditure was \$1. 5

million. All revenues had been collected in cash during the year and all expenses other than

depreciation were paid in cash.

What were Brandywine's 2007 net gain, total income margin, and cash flow?

Net gain = 12M * (1 - 75%) - 1 ) 5M = \$1. a few million

Total earnings margin = \$1. 5M/12M = 12. 5%

Cash flow = 1 . 5M + 1 . 5M = \$3 million

Presume the company altered its devaluation calculation procedures(still within GAAP)such that

it is depreciation expense doubled. Just how would this change influence Brandywine's net income, total profit margin, and cash flow?

Net gain = 12M *(1 -- 75%) -- 3M sama dengan \$0 million = a decrease of \$1. 5 million

Total profit margin = \$0M /12M = 0% = a loss of \$1. 5 million

Cash flow = 0M & 3M = \$3 mil = zero change

1Income statement

Revenues \$ 12. 00

Less: Expenditures \$ being unfaithful. 00

Less: Devaluation \$ 1 ) 50 dollar 10. 55

Net gain

\$ 1 ) 50

2Net profits \$1. 60

Total profit margin12. 50%

Cash flows bucks 3. 00

Income - Bills

3

Salary statement

Profits \$12. 00

Significantly less: Expenses \$ 9. 00

Much less: Depreciation \$ 3. 00 \$ doze. 00

Net income bucks -

Net income \$ -

Total earnings margin0. 00%

Cash flows\$3. 00

Revenues -- Expenses

Describe the difference between cash and accrual accounting. Be sure to incorporate a discussion of the revenue identification and coordinating principles.

Funds accounting accounts for expenses and revenues during the time that there is cash flows whilst accrual