Brandywire Homecare, a not for profit business had revenues of $12 million in 2007. Expenses other thatn depreciation totaled 75 percent of revenues, and depreciation expense was 1.5 million. All revenues were collected in cash during the year and all expenses other than depreciation were paid in cash.
a. construct Brandywine 2007 income statement
b. what were brandywire net income, total profit margin,and cash flow?
c. Now suppose the company changed its depreciation calculations procedures (still within GAAP) susch that its depreciation expense doubled. How would this change affect Brandywines net income, total profit margin, and cash flow?
d. Suppose the change had halved, rather than doubled, the firms depreciation expense. Now what would be the impact on net income, total profit margin, and cash flow?