Question: Good Faith Hospital needs to sell bonds to finance major
Good Faith Hospital needs to sell bonds to finance major renovations and purchases of modern equipment. The hospital recently experienced difficulties, however, and its operating margin for the past 3 years fell below the median operating margin for hospitals of similar size. The hospital is preparing its financial statements, and preliminary indications are that its operating margin will continue its downward slide. The CFO is concerned that the bond- rating agency will lower the hospital’s bond rating, resulting in an increase in the interest rate on the new bonds. The CFO wants to report a higher operating margin than that of the previous year. He tells the chief accountant: “I don’t want you to do anything you shouldn’t do, but we both know that higher interest rates on the new bonds will reduce our operating margin even further. Just sharpen your pencil to see if you can reduce this year’s provision for uncollectible patient receivables and estimated third- party settlements.” If you were the chief accountant, how would you react to the CFO’s request?
Answer to relevant Questions(Multiple choice) 1. To prepare common size statements, what do you do to the financial statement data elements? a. Convert them to amounts per capita b. Present them on a single page c. Show them as percentages of 100 d. ...The following information is extracted from a village’s governmental funds statement of revenues, expenditures, and changes in fund balances (amounts in thousands). Compute the village’s operating margin (a) for the ...Following are extracts from the financial statements of Elisa County for the year ended December 31, 2013. The funds shown are the governmental operating funds; Capital Projects Funds are omit-ted. (All amounts are in ...Why is it important to put the appropriate date or time period on a financial statement? Each of the account categories listed in E15- 1 is increased with either a debit or a credit. Indicate which is used to record an increase in each type of account, and state whether the normal account balance is a debit or a ...
Post your question