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Brandywine HomecareNameUniversityBrandywine Homecare, a not-for-profit business, had revenues of $12 million in 2007. Expenses other than depreciation totaled 75 percent of revenues, i.e. $9 million, and depreciation expense was $1.5 million. There are three financial statements as follows: -•Income statement•Balance sheet, and •Statement of the cash flows.Total profit margin of 12.5 of the Brandywine Homecare shows that homecare makes about 12.5 cents on the every dollar of the total revenue. In case if company doubles 1
Brandywine Homecaredepreciation, then both the net income and the profit margin would be zero. But cash flow will remain same for both the cases, i.e. $3million. Accrual and the cash accounting are the two similar methods of maintaining the accurate accounting records. As per the report, it is stated that all the revenue was collected in the cash during year and all the expenses other than the depreciation was also paid in cash.Brandywine Homecare’s 2007 Income Statement (In Thousands)Revenues:Total revenues $ 12,000Expenses:Expenses $ 9,000Depreciation 1,500Total expenses $10,500Revenue over expenses (Net Income) $ 1,500Brandywine Homecare’s 2007 Net Income, Total Profit Margin, and Cash FlowNet Income = Total revenue – Total Expenses= $ 12,000 - $ 10,500= $ 1,500Brandywine Homecare’s revenue over expenses (net income) would be $1.5 million.