Use Additional Internation from $10-$K to Anglyze Flanacisi Statements Healtheare Services Group provides management services to the housekeeping, facility mainlanamoe, and dietary departments at nursing homes, retirement complexer, rehabilitation cenlars, and hospitals. The company reports the following information in Schedule II of a recent fiseal year $($FY$)10-$K$.$

$\backslash$table$[[],[$$ thousandly,Balance at Bectivitys of vear,Aequititions and Blaposillow,Bed Debt Experse,Whis Oills,Bituise of and ollear$],[$December $31,$ FY$3,$ allowance for doubllul accounts...,$$85,583,$$ $0,$$$31,969,$$$24,088,$$$73\mathrm{.}484],[$December $31,$ FY$2,$ allowance for doublilil accounts. $..,67,801,0,10,482,12,700,65,583],[$December $31,$ FY$1,$ allowance for doubllul accounts $...,52,383,42,236,9,638,36,464,67,801]]$

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$[[$$ millions,FV$3,$FV$2,$FY$1],[$Revenue$,$$$1,690,176,$$$1,841,959,$$$1,760,303],[$Operating income before tax,$53,496,53,769,117,208],[$Total assets.,$718,334,777,529,785,031]]$

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&P $500$ report common$-$size allowance for doubtful accounts between $3\%$ and $5\%.$ Why might Healthcare Services Group's ratio be so much higher? How could an anlyst verify this inference?

c$.$ Compute the common$-$size bad debt expense for each year. Express bad debt expense as a percentage of that year's revenue. Interpret the ratio for FY$3.$ What trend do we observe?