a) Common size allowance for doubtful debts:-
2015 2014 2013
Revenues :- 22564 21501 14854
Bad Debts:- 4110 3504 2438
Revenue /Bad Debts as %18.21% 16.30% 16.41%
Increase in bad debts:- 606 1066
Increase/(Decrease
in Bad debts as %) -76.83 175%
(606-1066)/1066 (1066-606)/606
Revenue increase 1003 6703
Revenue as a increase %4.08% 45.13%
Bad debt are increased in 2014 by 175% and sales also increase in 45.13%
Bad debt are increased In 2015 by -76.83 and Sales increased by 4.08%
It is concluded that the the bad debts are increasing but the revenue is not increasing in same manner.
b) Bad debts are high when compared to other industry:-
This is due to low income of the patients, because of the low income they are not able to pay total amount of bill
And one more reason is they are not insured , because of no insurance they may not able to pay the bills
It can be reduced by increasing their revenues and encourage to take health insurance policy.
c) what trend would you observe?
It is observed that the revenue increased in 2015 by 4.08% but the 2014 was 45.13%
It is observed the there is no specific trend in revenues.
Bad debt are reduced by -76.83% in 2015 and Increased by 175% 2014
d) If bad debt reduced by 500:- then the operation income before tax will increase by 500 i.e1837
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