Please help with part b and e

MAJOR MEDICAL CENTER1

1Major Medical Center is a fictional organization. Any similarity to real organizations is purely coincidental.

For the Major Medical Center financial statements on the following pages, complete the following:

a. Read the auditors opinion letter. Are any flags raised?

b. Review the financial statements. Search for unusual items. What things catch your eye on the balance sheet, operating statement, and cash flow statement?

c. Review the notes. Do any of them raise cause for concern?

d. Calculate the following ratios: common size, current, quick, days of cash on hand, receivables turnover, average collection period, fixed asset turnover, total asset turnover, debt, debt to equity, times-interest-earned, operating margin, total margin, ROA, and RONA.

e. What do you think of Major Medical Centers financial status?

I.N. SINCER AND OLD, CPAs

2650 East 38th Street

New York, New York 10089

Report of Independent Auditors

Board of Trustees

Major Medical Center

We have audited the accompanying statements of financial position of Major Medical Center (the Medical Center) as of December 31, 2018 and 2017, and the related statements of operations, changes in net assets, and cash flows for the years then ended. These financial statements are the responsibility of the Medical Centers management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Major Medical Center at December 31, 2018 and 2017, and the results of its operations, changes in net assets, and cash flows for the years then ended, in conformity with generally accepted accounting principles.

April 30, 2018

I.N. SINCER AND OLD, CPAS Major Medical Center Statements of Financial Position
December 31
2018	2017
(In Thousands)
Assets Current Assets
Cash and cash equivalents	$ 8,065	$9,005
Assets limited as to usecompensating balance
for letters of credit	1,000
Short-term investments	1,387	1,283
Receivables for patient care, net of allowance
for doubtful accounts (2018$27,232; 2017$31,934)	49,719	47,614
Pledges receivable	1,814	2,205
Inventories, at average cost	1,690	2,326
Due from third-party reimbursement programs	6,539
Receivables for government grants		467
Other	2,234	3,415
Total Current Assets	$ 72,448	$66,315
Assets Limited as to Use
Sinking fund	14,487	13,410
Compensating balance for standby letters of credit	923
Long-term investments	1,132	618
Due from affiliates, net	3,417	3,543
Pledges receivable, net of allowance for uncollectible
pledges (2018$2,218; 2017$4,453)	1,889	1,468
Property, plant, and equipment net	98,555	89,777
Deferred financing costs	1,323
Other	2,065	1,043
$196,239	$176,174
Liabilities and Net Assets
Current Liabilities
Current portion of long-term debt	$ 11,608	$11,488
Accounts payable and accrued expenses	29,489	25,311
Accrued salaries and related liabilities	25,572	20,096
Due to third-party reimbursement programs, net		1,874
Advances on government grants	1,587
Total Current Liabilities	$ 68,256	$58,769
Long-term debt, less current portion	55,539	47,709
Accrued post-retirement benefits	6,023	6,017
Other noncurrent liabilities	16,445	17,014
Total Liabilities	$146,263	$129,509