How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Bill Smith Your Own Question

Bill Smith
Bill Smith, Graduate Student
Category: Homework
Satisfied Customers: 12
Experience:  Certifications in all MS Applications, MBA
15933772
Type Your Homework Question Here...
Bill Smith is online now
A new question is answered every 9 seconds

Determine the revenue variance from Arcadia Hospitals 2005

Customer Question

Determine the revenue variance from Arcadia Hospital’s 2005 budget.
• Address the following: Is the variance positive or negative? Which is desirable, a positive or
negative variance? Why? What do you think are some of the possible causes for this variance?
How would you adjust Arcadia Hospital’s 2006 budget in light of your variance analysis? Explain
your answer. Please I need this no later than 7 pm on Thursday 3/26/09.
Submitted: 5 years ago.
Category: Homework
Expert:  Bill Smith replied 5 years ago.
In order to calculate the variance, please provide the revenue figures.
Customer: replied 5 years ago.
Arcadia Hospital
Income Statement
YTD Dec 31, 2005
(Dollars in Millions)
Operating Revenues2005% of revBudgetOver/(Under)
Patient revenues500 550
less:Allowance for doubtful accounts13 14
equalsNet patient revenues488 536
Other Income:
Investments75 60
Misc5 0
Total Operating Revenue568 100.00%596
Operating expenses:
Wages200 35.24%180
Taxes & Benefits75 13.22%70
Temporary/Contract Labor5 0.88%0
Medical/surgical supplies25 4.41%30
Other misc supplies5 0.88%5
Dues/subscriptions3 0.53%3
Transcription expense10 1.76%15
Leases & rentals50 8.81%45
Malpractice Insurance75 13.22%70
Other Insurance30 5.29%32
Professional Fees20 3.52%20
Utilities15 2.64%10
Maintenance & Repairs15 2.64%10
Depreciation/Amortization7 1.23%7
Interest Expense1 0.18%1
Total Operating Expenses536 94.45%498
Net Income32 5.55%98

 

 

These are approaches to valuation:

Rules of thumb: (twice annual revenues) = $1136 million

2) Adjusted book value: (owner's equity) = $7900 million

3) Discounted cash flow:

Cash flow amount

 

Capitalization rate

 

Value

$655 million (assume same as 2006!)

6%

$10,917

8%

$8,187

10%

$6,550

12%

$5,458

 

 

Although there are many ratios in use, some of the key ratios are formulated and described below:

  • Current ratio= (current assets/current liabilities)
  • Quick ratio= ((current assets-inventory)/current liabilities)

These two ratios are short-term liquidity ratios. They are calculated to ascertain how well a business is in paying its current liabilities, in case it has to in an emergency situation.

 

If you need anything else, please let me know. Thank you! Customer/p>

Expert:  Bill Smith replied 5 years ago.

 

Determine the revenue variance from Arcadia Hospital's 2005 budget.

 

Is the variance positive or negative?

 

Looking only at revenue:

Patient Revenue for '05 = 500 while budget = 550, this means that patient revenue is under budget. Since the focus is on revenue and not costs, under budget is unfavorable, meaning that there was less actual revenue than expected when the budget was created.

 

Net patient revenue is under budget by 49, unfavorable, less incoming revenue than planned with the budget.

 

Total Operating Revenue: under budget by 29, unfavorable, less incoming revenue than planned with the budget.

 

Which is desirable, a positive or negative variance?

When focusing on revenue, it is favorable to be over budget, more actual revenue than planned with the budget. Under budget, would indicate less revenue than budgeted which is unfavorable.

 

When focusing on costs, it is favorable to be under budget, less actual costs than originally budgeted. It is unfavorable to be over budget, more actual costs than budgeted.

 

Why? What do you think are some of the possible causes for this variance?

Some possibilities for the revenue shortage could be too much competition from other hospitals, more advertising from other hospitals, and poor level of care from this hospital. Another possibility is low prices.

 

How would you adjust Arcadia Hospital's 2006 budget in light of your variance analysis?

If the hospital does not expect to take action to increase revenue, then the plan for future years may need to be lowered if they expect diminished revenue streams going forward.

 

 

Bill Smith, Graduate Student
Category: Homework
Satisfied Customers: 12
Experience: Certifications in all MS Applications, MBA
Bill Smith and 12 other Homework Specialists are ready to help you
Customer: replied 5 years ago.

Bill,

 

Thank you so very much for your help. I have also posted another question. Could you take the time to see if you could help me with it? It is a final finance project. I will wait for your response.

 

Customer/p>
Expert:  Bill Smith replied 5 years ago.
I'm not seeing your new question. To appear on my list of possible questions it needs to be under the homework experts category. Please accept the completed question.
Customer: replied 5 years ago.

Bill,

 

I will repost my other assignment. I will also add an additional $10.00 to the $65.00 already posted for to pay for this reply. I will post my assignment to the financial expert with your name on it.

 

Thank you,

 

Customer/p>
Expert:  Bill Smith replied 5 years ago.
THIS ANSWER IS LOCKED!
You can view this answer by clicking here to Register or Login and paying $3.
If you've already paid for this answer, simply Login.
Customer: replied 5 years ago.

Justanswer has given this assignment to Mohammad Ali. I don't know how to change this once it has been accepted by someone else. I will however, post to the homework expert requesting your name to pay you for your time here. I hope that is adequate.

 

Thank you,

 

Customer/p>

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
< Last | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin Kernersville, NC
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther Woodstock, NY
  • Thank you so much for taking your time and knowledge to support my concerns. Not only did you answer my questions, you even took it a step further with replying with more pertinent information I needed to know. Robin Elkton, Maryland
  • He answered my question promptly and gave me accurate, detailed information. If all of your experts are half as good, you have a great thing going here. Diane Dallas, TX
 
 
 

Meet The Experts:

 
 
 
  • Manal Elkhoshkhany

    Tutor

    Satisfied Customers:

    4522
    More than 5000 online tutoring sessions.
< Last | Next >
  • http://ww2.justanswer.com/uploads/BU/BusinessTutor/2012-2-2_115741_Kouki2.64x64.jpg Manal Elkhoshkhany's Avatar

    Manal Elkhoshkhany

    Tutor

    Satisfied Customers:

    4522
    More than 5000 online tutoring sessions.
  • http://ww2.justanswer.com/uploads/ComputersGuru/2010-02-13_051118_Photo41.JPG LogicPro's Avatar

    LogicPro

    Engineer

    Satisfied Customers:

    3458
    Expert in Java C++ C C# VB Javascript Design SQL HTML
  • http://ww2.justanswer.com/uploads/LI/lindaus/2012-6-10_04811_IMG20120609164157.64x64.jpg Linda_us's Avatar

    Linda_us

    Finance, Accounts & Homework Tutor

    Satisfied Customers:

    3124
    Post Graduate Diploma in Management (MBA)
  • http://ww2.justanswer.com/uploads/chooser77/2009-08-18_162025_Chris.jpg Chris M.'s Avatar

    Chris M.

    M.S.W. Social Work

    Satisfied Customers:

    2385
    Master's Degree, strong math and writing skills, experience in one-on-one tutoring (college English)
  • http://ww2.justanswer.com/uploads/JawaadAhmed/2009-6-27_12137_SIs_SHadi.jpg F. Naz's Avatar

    F. Naz

    Chartered Accountant

    Satisfied Customers:

    1988
    Experience with chartered accountancy
  • http://ww2.justanswer.com/uploads/JK/jkcpa/2011-1-16_182614_jkcpa.64x64.jpg Bizhelp's Avatar

    Bizhelp

    CPA

    Satisfied Customers:

    1876
    Bachelors Degree and CPA with Accounting work experience
  • http://ww2.justanswer.com/uploads/avremote/photoa.jpg Seanna's Avatar

    Seanna

    Tutor

    Satisfied Customers:

    1781
    3,000+ satisfied customers, all topics, A+ work
 
 
 

Related Homework Questions