Sunset Medical

International Research Journal of Applied Finance (www.irjaf.com)

Case Studies in Finance and Accounting

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

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International Research Journal of Applied Finance (www.irjaf.com)

Case Studies in Finance and Accounting

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...