Problems 41 Middleton Clinic had total assets of $500,000 and an equity balance of $350,000 at...

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Problems 41 Middleton Clinic had total assets of $500,000 and an equity balance of $350,000 at the end of 2014. One year late

4.2 San Mateo Healthcare had an equity balance of $1.38 million at the beginning of the year. At the end of the year, its equ

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Answer 1

Answer #1

You have asked two unrelated questions in a single post. I have addressed the firs tone. Please post the second question separately.

Q - 4.1

Assets in 2014, A0 = 500,000; Assets in 2015 = A1 = 575,000

Hence, dollar growth in assets = A1 - A0 = 575,000 - 500,000 = $ 75,000

Equity in 2014, E0 = 350,000; Equity in 2015, E1 = 380,000

Dollar growth in equity = E1 - E0 = 380,000 - 350,000 = $ 30,000

Hence,

the dollar growth in asset is $ 75,000
Same has been financed by
- $ 30,000 in equity and
- Balance 75,000 - 30,000 = $ 45,000 in debt
- a debt equity mix of 45,000 : 30,000 = 3 : 2 = 1.5

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Answer 2

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