Gainesville surgicenter inc is a large ambulatory surgery


Gainesville Surgicenter Inc. is a large, ambulatory surgery center owned by a group practice of surgeons in Gainesville, Florida. The 2010 financial statements for the firm are shown below: Balance Sheet as of December 31, 2010 (Thousands of dollars) Cash $1,800 Accounts payable $7,200 Receivables $10,800 Notes payable $3,472 Inventories $12,600 Accruals $2,520 Total current assets $25,200 Total current liabilities $13,192 Net fixed assets $21,600 Mortgage bonds $5,000 Common stock $2,000 Retained earnings $26,608 Total assets $46,800 Total liabilities & equity $46,800 Income Statement for 2010 (Thousands of dollars) Revenues $36,000 Operating costs $30,783 Earnings before interest and taxes $5,217 Interest $1,017 Earnings before taxes $4,200 Taxes (40%) $1,680 Net income $2,520 Dividends (60%) $1,512 Addition to retained earnings $1,008 a. Assume that the company was operating at full capacity in 2010 with regard to all items except fixed assets (operating rooms and support space); fixed assets in 2010 were utilized to only 75 percent of capacity. By what percentage could 2011 revenues increase over 2010 revenues without the need for an increase in fixed assets? b. Now suppose 2011 revenues increase by 25 percent over 2010 revenues. Use the constant growth method to develop a pro forma balance sheet and income statement as in Table 14.3. Assume that Gainesville cannot sell any fixed assets and that any financing required is borrowed as notes payable at an interest rate of 12 percent. Please someone help me with part (b)

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Financial Accounting: Gainesville surgicenter inc is a large ambulatory surgery
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