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Solution Case 3-1 Cash Flow Analysis – Orthodontic Centers of America

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PURWANINGRUM
CASE 3-1
Cash Flow Analysis – Orthodontic Centers of America

1. Actual cash collection for year 1998 to 2000: | 2000 | 1999 | 1998 | Total Receivables | 3.535.000 | 87.563.000 | 66.477.000 | net change | (84.028.000) | 21.086.000 | 66.477.000 | | | | | Patient prepayments | - | - | 4.326.000 | net change | - | (4.326.000) | 4.326.000 | | | | | Net Revenue | 268.836.000 | 226.290.000 | 171.298.000 | Less: change in account receivable | 84.028.000 | (21.086.000) | (66.477.000) | Plus: change in advances | - | (4.326.000) | 4.326.000 | Actual Cash Collections | 352.864.000 | 200.878.000 | 109.147.000 |

2. (i) Comparison of cash collection with revenue reported for each year: | 2000 | 1999 | 1998 | Cash Collections | 352.864.000 | 200.878.000 | 109.147.000 | Reported Revenue | 268.836.000 | 226.290.000 | 171.298.000 | % Change | 31,26% | -11,23% | -36,28% | Difference | 84.028.000 | (25.412.000) | (62.151.000) |

(ii) Comparison of cash collection with revenue using pre-Januay 1, 2000 recognition method: | 2000 | 1999 | 1998 | Cash Collections | 352.864.000 | 200.878.000 | 109.147.000 | Revenue recognition pre-Jan1, 2000 method | 295.136.000 | 249.081.576 | 189.915.926 | % Change | 20% | -19% | -43% | Difference | 57.728.000 | (48.203.576) | (80.768.926) |

(iii) Comparison of cash collection with

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