Financial Analysis of the Healthcare Field

839 WordsFeb 24, 20183 Pages
Introduction In the ever changing dynamic of the healthcare industry, it is central to look at financial trends and different types of financial analysis to capitalize on resources and minimize future impacts. With any growing healthcare organization it is vital to be aware of one’s internal and external environment, the community it serves as well as the status of the economy. The purpose of this paper is to determine the significance of certain types of financial analysis, particularly financial ratios, the use of EBITDA and how they influence the healthcare field. EBITDA, Financial Ratios and growing trends in healthcare EBITDA is an acronym which stands for earnings before interest, taxation, depreciation and amortization and generally used to determine how profitable a company can be (Brockman, C., Russell, J., 2012). The basic understanding of the EBITDA is defined as the money the company has made without considering expenses or taxes (Brockman, C., Russell, J., 2012). This can give a false sense of how much the company is actually making or worth. In a hypothetical situation, a company creates a product that costs the consumer $10, and 200 are made to meet the projected demand. With EBITDA, it is assumed there is already a $2000 profit made even if the product is actually never purchased. EBITDA does not calculate the manufacturing costs, taxes and employee salaries that go into making a product. Although EBITDA does not seem to measure the actual value of a
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