Problem:
An aggressive working capital policy, may increase the entity's return, but it also increases the risk.
1. Please solve this Net Income Problem.
A firm has the following accounts:
Net patient revenue = $1,500,000
Supply expense = $200,000
Depreciation expense = $100,000
Salaries and benefits = $700,000
Other expenses = $200,000
Net accounts receivable = $150,000
What is the net income for the period?
Hint: Net accounts receivable is not an expense it is a income.
2. Targeted debt to equity ratio problem: A hospital issues $20 million in bonds and $60 million in equity to finance a new project. Its targeted debt to equity ratio is?