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9/30/95 Adjustments 9/30/95
Cash $1,271,031 -- $1,271,031
Accounts receivable 9,115,026 ($1,072,232) 8,042,794
Allowance for contractual adjustments (4,205,058) 274,701 (3,861,682)
Allowance for bad debts (142,885) (142,885)
Est. third-party payor settlements--Medicare 2,269,063 (295,473) 1,973,590
Allowance for unsuccessful claims (1,087,606) (1,087,606)
Accounts receivable--employees 51,518 -- 51,518
Accounts receivable--other 96,820 -- 96,820
Prepaid expenses 656,465 -- 656,465
Total current assets 9,254,865 -- 7,000,045
Property, plant & equipment 2,850,538 -- 2,850,538
Accumulated depreciation (1,456,464) -- (1,456,464)
Total PP&E 1,394,074 -- 1,394,074
Deposits 9,033 -- 9,033
Long-term accounts receivable-–other 78,435 (59,610) 18,825
Total other assets 87,468 -- 27,858
Workforce-in-place -- 2,100,000 2,100,000
Total intangible assets -- -- 2,100,000
Total assets 10,736,407 -- 10,521,977
Current portion of long-term debt 369,967 -- 369,967
Accounts payable 750,199 -- 750,199
Accounts payable--other 165,808 -- 165,808
Accrued payroll 5,009,968 -- 5,009,968
Accrued payroll taxes 1,141,431 -- 1,141,431
Other accrued expenses 4,206,978 -- 4,206,978
Due to Medicare -- 201,000 201,000
Total current liabilities 11,644,351 -- 11,845,351
Notes payable, long-term portion 500,304 -- 500,304
Unaudited cost reports -- (517,909) 517,909
Total liabilities 12,144,655 (718,909) 12,863,564
Liabilities in excess of assets (1,408,249) (933,338) (2,341,587)
To corroborate his findings of net asset value, Hahn used a
market-transaction approach. This approach involved valuing the
Sta-Home tax-exempt entities on the basis of market values of
comparable companies that had been sold. To Hahn, the comparable
approach was only a secondary indication of value, because sales
of other individual home health care agencies appeared to be too
“idiosyncratic” to provide a principled basis for valuation. In
any event, Hahn noted that approximately 50 applications to
change ownership had been filed by home health care agencies in
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