Question: Consider this income statement: Green Valley Nursing Home Statement of Income Year Ended 12/31/15 Revenue:

Patient Service revenue $3,163,258

Less Provision for bad debt (110,000)

Net Patient service revenue $3,053,258

Other Revenue 106,146

Net Operating Revenues $3,159,404

Expenses:

Salaries and Benefits $1,525,438

Medical Supplies and drugs 966,781

Insuranace and Other 296,357

Depreciation 85,000

Interest 206,780

Total Expenses $3,070,356

Operating income $89,048

Provision for income taxes 31,167

Net Income $57,881

A. Why does Green Valley show a provision for income taxes while the other two income statements do not?

B. What is Green Valley's total profit margin? How does this value compare with the values for Sunnyvale Clinic and BestCare?

C. The before-tax profit margin for Green Valley is operating income divided by total revenues. Calculate Green Valley's before-tax profit margin. Why might this be a better measure of expense control when comparing an investor-owned busincess with a not-for-profit business?