Problem: Information Given:
Read the scenario below and answer the following 3 questions (be sure to scroll down). You will also need to complete the Budget.
Scenario: South Shore Medical Clinic is expanding its operations. As you will notice from Year 3 to Year 4, they have increased their revenue and encounted additional expenses. In addition, they have rented a new office at the end of the year so their rent expense is going to increase (they will now have two offices). In addition, they have added 2 additional staff members to payroll. Using the Income Statement, prepare a budget that takes these changes into account for the upcoming year.
Questions:
1. Using the Balance Sheet, calculate the current ratio. Comment on whether or not the ratio shows financial strength.
2. Using the Income Statement, calculate the operating margin ratio for Year 4. How well does the company measure in terms of operating efficiency?
3. Explain your budget suggestions. Do you think Revenue will increase or decrease? Do you think Expenses will increase or decrease?
Task 1: South Shore Medical Clinic is expanding its operations. As you will notice from Year 3 to Year 4, they have increased their revenue and encounted additional expenses. In addition, they have rented a new office at the end of the year so their rent expense is going to increase (they will now have two offices). In addition, they have added 2 additional staff members to payroll. Using the Income Statement below attached, prepare a budget that takes these changes into account for the upcoming year. Suggest the budget amounts for Year 5 in the column below attached.
Information related to above question is enclosed below:
Attachment:- TemplateforBudgetProject.rar