Brandywine Homecare , a not for profitbusiness, had revenues of $12 million in 2007.
Expenses other than depreciation totaled 75 per centrevenues,and depreciation expenses was $1.5million.
All revenues were collected in cash during the year and allexpenses other than depreciation were paid in cash.
a. Construct Brandywine's 2007 income statement
b.What is Brandywine's net income? total profti margin? and cash flow?
c. suppose the company changed it depreciation calculationprocedures(still withon the GAAP) such that its depreciationexpense doubled. How would this change affect Brandywine'snet income? total profit margin and cash flow?
d. Suppose the change had halfved,rather than doubled, the firm's depreciation expense. Now what would be the impact on net income,total peofit margin and cashflow?