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Consider the following financia statements for Green Valley Nursing Home, Inc., a for-profit, long term...

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Finance

Consider the following financia statements for Green Valley Nursing Home, Inc., a for-profit, long term care facility:
Green Valley Nursing Home, Inc., Statement of Income and Rretained Earnings, Year-ended December 31, 2015 Green Valley Nursing home, Inc., Balance sheet, December 31, 2015
Revenue: Assets
Net patient service revenue $ 3,163,258.00 Current assets:
other revenue $ 106,146.00 cash $ 105,737.00
total revenues $ 3,269,404.00 marketable securities $ 200,000.00
Expenses: net patient accounts receivable $ 215,600.00
salaries and benefits $ 1,515,438.00 supplies $ 87,655.00
medical supplies and drugs $ 966,781.00 total current assets $ 608,992.00
insurance $ 296,357.00 property and equipment $ 2,250,000.00
provision for bad debts $ 110,000.00 less accumulated depreciation $ 356,000.00
depreciation $ 85,000.00 net property and equipment $ 1,894,000.00
interest $ 206,780.00 total assets $ 2,502,992.00
total expenses $ 3,180,356.00
operating income $ 89,048.00 liabilities and shareholders equity
provision for income taxes $ 31,167.00 current liabilities:
net income $ 57,881.00 accounts payable $ 72,250.00
accrued expenses $ 192,900.00
retained earning, beginning of year $ 199,961.00 notes payable $ 100,000.00
retained earnings, end of year $ 257,842.00 current portion of long term debt $ 80,000.00
total current liabilities $ 445,150.00
long-term debt $ 1,700,000.00
shareholders' equity
common stock, $10 per value $ 100,000.00
retained earnings $ 257,842.00
total shareholders' equity $ 357,842.00
total liabilities and shareholders' equity $ 2,502,992.00
A perform a Du Pont analysis on Green Valley. Assume that the industry avergae ratios are as follows:
total margin 3.5%
total asset turnover 1.5
equity multiplier 2.5
return on equity (ROE) 13.1%
B calculate and interpret the following ratios:
industry average
return on assest (ROA) 5.2%
current ratio 2
days cash on hand 22 days
average collection period 19 days
debt ratio 71%
debt-tp-equity ratio 2.5
times interest earned (TIE) ratio 2.6
fixed asset turnover ratio 1.4
C assume that there are 10,000 shared of Green Valley's stock outstanding and that some recents sold for $45 per share
what is the firm's price/earnings ratio?
what is its market/book ratio?
(hint: these ratios are discussed in the supplement to this chapter)

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