Consider this income statement:

a. How does this income statement differ from the ones presented in Table 3.1 and Problem 3.2?

b. Why does Green Valley show a provision for income taxes while the other two income statements did not?

c. What is Green Valley’s total profit margin? How does this value compare with the values for Sunnyvale Clinic and BestCare?

d. The before-tax profit margin for Green Valley is operating income divided by total revenues. Calculate Green Valley’s before-tax profit margin. Why may this be a better measure of expense control when comparing an investor-owned business with a not-for-profit business?

Green Valley Nursing Home, Inc. Statement of Income Year Ended December 31, 2004 Revenue: Net patient service revenue Other revenue Total revenues Expenses: Salaries and benefits Medical supplies and drugs Insurance and other Provision for bad debts Depreciation Interest Total expenses Operating income Provision for income taxes Net income $3,163,258 106,146 $3,269,404 $1,515,438 966,781 296,357 110,000 85,000 206,780 $3,180,356 $ 89,048 31,167 $ 57,881