INCOME STATEMENT
Statement for the Year 2010:
Total Revenue: $1500,000,000
Operating Expenses and Depreciation: $500,000
Marketing Expenses: $25000
Net Income: $1499475000
Statement for the Year 2011:
Total Revenue: $1250,000,000
Operating Expenses and Depreciation: $300,000
Marketing Expenses: $25000
Net Income: $1249675000
Fall in Income from 2010 to 2011: $249800000
The detailed Income statement is as follows:
The statement clearly shows that there has been a fall in net income in the year 2011 from 2010 to the tune of $249,800,000 which represents a fall by 16.66%. But this does not indicate that the firm is in bad financial condition. It is to be noted that the costs have also fallen in 2011. Income as a percentage of total costs has, in fact, risen from 285614.2857 in 2010 to 384515.3846 in 2011, which is considerably high. If we deduct the grants received from the income we find that the figure is $1124475000 for 2010 and $937175000 for 2011. The income without grants as a percentage of total costs has risen from 2141.857143 in 2010 to 2883.615385 in 2011. This indicates that, the firm is not dependent on grants, and is capable of covering its costs and generating income without external help.
The hospital has faced a fall in number of patients from 500 in 2010 to 400 in 2011. This implies that an investment in equipments will induce more patients to opt for Franklin Healthcare, thereby increasing its revenue and net income. An investment will surely help this no profit firm to grow and meet its objective of providing premium healthcare.
Bibliography
Brigham, E.F. & Houston, J.F.(2009). “Fundamentals of Financial Management”. Cengage Learning. Tenth Edition.
Garrison, R.H., Noreen, E.W., Brewer, P.C.(2013). “Managerial Accounting”. McGraw-Hill. 14th Edition.
“Accounting Review: Income Statements and Balance Sheets”. www2.gsu.edu/~wwwfnc/3300/chapter3.pdf.
