Instruction
In an Excel spreadsheet, create two tabs. In the first tab you will the first part of your homework assignment and the second tab you will use for the second part of your assignment.
Part 1:
Create simple income statements for two hospitals - an investor-owned hospital named Big Green Medical Center and another for St. Healthy Hospital. Using the following data, calculate the incomes for the hospitals.
Both hospitals generate $615,000 in gross revenues per day;
Big Green collects 42.5% of gross revenues while St. Healthy collects 45% of its gross revenues;
Salaries at Big Green are 48% of net revenue and 52% at St. Healthy;
Supply expenses total 21% of net revenues at Big Green and 26% at St. Healthy;
Other operating expenses are 18% of net revenues at both facilities;
Taxes on investor-owned businesses are 35% of operating income.
St. Healthy earned $1,125,000 on investments and received $500,000 in charitable donations.
Show a side-by side comparison of each line item on your income statements.
Part 2:
Again doing a side by side comparison of Big Green and St. Healthy, show me your calculations for the following scenario:
Both hospitals are considering issuing bonds to finance expansion of facilities next door to their competitors. A recent look at the Wall Street Journal shows that the current interest rate on investor owned hospital debt is 4.25%. If each hospital is incurring $25 million in debt, what interest rate will each hospital pay? Show your calculations in excel!