Question

Columbia Needycare Case Study Part I Income Statement For the Year Ending December 31, 2017 Revenues Medical services rendered: $5,000,000.00 Total Revenues: $5,000,000.00 Expenses Non depreciation related $3.500,000.00 Depreciation: Total Expenses $1.000.000 00 54.500.000.00 : Net Income $500 000.00 Total Profit Margin Ratio $500,000g0 $51000/000.00 10%

For Part II of this case study, suppose that the clinic has an opportunity to purchase an additional building in another part of the city to help more patients. The new building will cost $480,000, but it will also need $35,000 in renovations. Based on this information, answer the following questions:

• Can the clinic afford to purchase and renovate the new facility?
• Do you have enough information to make this decision? If so, how would you recommend that the clinic handle the financing for purchasing and renovating the facility? If no, what additional information would clinic managers need to make this decision?

Answer 1

The given information is not sufficient to make the decision because we have not given information regarding the increase in revenue. To find out whether the purchase and renovation is feasible we should have the information of the incremental revenue that will be earned from the purchase of building.