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Sunset Medical: a Statement of Cash Flow Case

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Sunset Medical: A Statement of Cash Flow Case

Scott Wandler*
College of Business Administration
University of New Orleans New Orleans, LA 70148 swandler@uno.edu

Kevin Watson
College of Business Administration
Iowa State University Ames, IA 50011 kwatson@iastate.edu

*Corresponding Author

Abstract

Medical is based on a real situation occurring at an Orthopedic Medical practice in Colorado. While attending a trade show Dr. Jones, the managing partner at Sunset Medical, was approached by a medical consulting firm, Physicians Medical Inc. (PMI), to provide the practice billing and administrative services. Dr. Jones decided to hire PMI and signed a contract in February of 2011. Based on the interim financial statements that were released in June of 2011, Dr. Jones gave PMI control of the overall day to day operations of the practice. PMI immediately relieved the office manager of her duties and took over all operations of the practice. In early 2012, the 2011 financial statements were released and were not as impressive as the mid-year results. Dr. Jones is now worried that the increased power given to PMI may have been a mistake and has asked you to give a full assessment of the situation.

The case is suitable for an introductory Financial or Managerial Accounting class at the M.B.A. level once the students have a working knowledge of the financial statements. The students must critically evaluate contract language and financial statements to examine ethical dilemmas that face businesses.

Introduction
Dr. Sally Jones, a practicing Orthopedic Surgeon, is the managing partner at Sunset Medical3, a professional corporation located in Colorado. Sunset, which has been in business for approximately 10 years, is a small medical practice with 2010 revenues of just over
$1,000,000....

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