P$2-47.$ Use Additional Internation from $10-$K to Anslyxe Flanacial Statements Healtheare Services Group provides management services to the housekeeping, facility manianaos, and distary departments at nursing homes, relirament complexes, rehabilitation cenlars, and horpitals. The company reports the following information in Schedule II of a recent fiseal year $($FY$)10-$K$.$

$\backslash$table$[[],[$$ thouench,Balance at Besthish ol vert,Aequititions and Blematilon,Bad Debt emperse,What ONF,Dislones of and ol Year$],[$December $31,$ FY$3,$ allowance for doubliul accounts. $..,$$$85,583,$$ $0,$$$31,969,$$$24,088,$$$73\mathrm{.}484],[$December $31,$ FY$2,$ allewance for doubllul accounts...,$67,801,0,10,482,12,700,65,583],[$December $31,$ FY$1,$ allowance for doubllil accounts. $..,52,393,42,236,9,638,36,464,67\mathrm{.}801]]$

Accounts receivable represents the amount customers owe the company for services rendered. The balance in the allowance for doubtful accounts is the company's best estimate of the amount that customers will not repay.

Healthcare Services Group's balance sheet and income statements reported the following.

$\backslash$table$[[$$ millions,FV$3,$FV$2,$F$11],[$Revenue$,$$$1,690,176,$$$1,841,959,$$$1,760,303],[$Operating income before tax,$53,496,53,769,117,208],[$Total assets,$718,334,777\mathrm{.}529,785,031]]$

Required

a$.$ Compute the common$-$size allowance for doubtful accounts for each year. Express the allowance as a percentage of that year's total assets. Compare the common$-$size amount across the three years; what do we observe? What is one conclusion analysts might draw from this analysis?

b$.$ On average, the firms in the SP$2-47.$ Use Additional Internation from $10-$K to Anslyxe Flanacial Statements Healtheare Services Group provides management services to the housekeeping, facility manianaos, and distary departments at nursing homes, relirament complexes, rehabilitation cenlars, and horpitals. The company reports the following information in Schedule II of a recent fiseal year $($FY$)10-$K$.$

$\backslash$table$[[],[$$ thouench,Balance at Besthish ol vert,Aequititions and Blematilon,Bad Debt emperse,What ONF,Dislones of and ol Year$],[$December $31,$ FY$3,$ allowance for doubliul accounts. $..,$$$85,583,$$ $0,$$$31,969,$$$24,088,$$$73\mathrm{.}484],[$December $31,$ FY$2,$ allewance for doubllul accounts...,$67,801,0,10,482,12,700,65,583],[$December $31,$ FY$1,$ allowance for doubllil accounts. $..,52,393,42,236,9,638,36,464,67\mathrm{.}801]]$

Accounts receivable represents the amount customers owe the company for services rendered. The balance in the allowance for doubtful accounts is the company's best estimate of the amount that customers will not repay.

Healthcare Services Group's balance sheet and income statements reported the following.

$\backslash$table$[[$$ millions,FV$3,$FV$2,$F$11],[$Revenue$,$$$1,690,176,$$$1,841,959,$$$1,760,303],[$Operating income before tax,$53,496,53,769,117,208],[$Total assets,$718,334,777\mathrm{.}529,785,031]]$

Required

a$.$ Compute the common$-$size allowance for doubtful accounts for each year. Express the allowance as a percentage of that year's total assets. Compare the common$-$size amount across the three years; what do we observe? What is one conclusion analysts might draw from this analysis?

b$.$ On average, the firms in the S