Question

Interpret Commonwealth’s statement of operations and balance sheet for 2017. An explanation of each account. For example, the company is repaying its debt at an increasing speed year after year. Is it good? Is it bad? Basically, what does it say about the organization.

INPUT DATA:
Statements of Operations:
(Millions of Dollars)
		2016		2017
Premium revenue		$313.7		$357.6
Interest revenue		2.4		3.5
Total revenues		$316.1		$361.1
Operating expenses:
Medical costs		$263.0		$291.8
Selling and administrative		36.8		43.6
Depreciation		4.7		5.0
Total operating expenses		$304.5		$340.4
Net income		$11.6		$20.7
Balance Sheets:
(Millions of Dollars)
		2016		2017
Cash		$37.2		$27.2
Short-term investments		42.7		60.9
Premiums receivable		3.7		7.4
Total current assets		$83.6		$95.5
Net plant and equipment		30.0		31.7
Total assets		$113.6		$127.2
Medical costs payable		$44.8		$48.7
Accounts payable/accruals		15.4		17.3
Total current liabilities		$60.2		$66.0
Long-term debt		17.1		4.2
Net assets (equity)		36.3		57.0
Total claims		$113.6		$127.2

Answer 1

Statements of Operations:					% change over the year = value of 2017/value of 2016	Increased or decreased	Good or bad
(Millions of Dollars)
		2016		2017
Premium revenue		$313.70		$357.60	114%	It is Increased over the Year	Good
Interest revenue		2.4		3.5	146%	It is Increased over the Year	Good
Total revenues		$316.10		$361.10	114%	It is Increased over the Year	Good
Operating expenses:
Medical costs		$263.00		$291.80	111%	It has increased- as expenses and costs are increasing	Bad
Selling and administrative		36.8		43.6	118%	It has increased- as expenses and costs are increasing	Bad
Depreciation		4.7		5	106%	It has increased- as expenses and costs are increasing	Bad
Total operating expenses		$304.50		$340.40	112%	It has increased- as expenses and costs are increasing	Bad
Net income		$11.60		$20.70	178%	It is Increased over the Year	Good
Balance Sheets:
(Millions of Dollars)
		2016		2017
Cash		$37.20		$27.20	73%	It has decreased.	Not bad
Short-term investments		42.7		60.9	143%	It has increased- as expenses and costs are increasing	Good
Premiums receivable		3.7		7.4	200%	It has increased- as expenses and costs are increasing	Good
Total current assets		$83.60		$95.50	114%	It has increased- as expenses and costs are increasing	Good
Net plant and equipment		30		31.7	106%	It has increased- as expenses and costs are increasing	Good
Total assets		$113.60		$127.20	112%
Medical costs payable		$44.80		$48.70	109%	It has increased- as expenses and costs are increasing	Bad
Accounts payable/accruals		15.4		17.3	112%	It has increased- as expenses and costs are increasing	Bad
Total current liabilities		$60.20		$66.00	110%	It has increased- as expenses and costs are increasing	Bad
Long-term debt		17.1		4.2	25%	it has decreased	Good
Net assets (equity)		36.3		57	157%	it has increased	good
Total claims		$113.60		$127.20	112%