Financial Management Of The Healthcare Organization

Financial statement analysis is the process of identifying financial strengths and weaknesses of a firm by appropriately establishing a relationship between the items of the balance sheet and the profit and loss account. Financial statement plays an important role in setting framework of managerial decisions. Operating indicator analysis are quantifiable measurements that help an organization define and measures progress towards organizational goals that have been defined and agreed upon by management. These goals may change as an organization’s goal change. Operating indicator analysis in health care are part of the health service manger’s quality and risk management plans. Plans are chosen based on the operating indicator analysis based on several factors such as regulatory and accrediting body initiatives and recommendations as well as identified organizational improvement areas. Generally, this analysis for health services is aimed at making sure program or service does what it is intended to do and do it well. Health service managers need the information provided by financial statement analysis. They need to know how their organization is doing financially, what their rate of profit is and whether or not they are they are managing their inventories and accounts receivable efficiently. This can help managers to decide if any changes need to be made and how to allocate their financial resources. Many managers of healthcare facilities use their organization’s financial statement analysis to calculate various ratios and

Financial statements paint a picture of financial health of an organization. Important aspects of the financial statement of a health care organization are ratios. Analysis of ratios show how two numbers relate or compare to one another. Ratios are a way for organizations to make comparison. These comparisons not only encompass what is happening presently but can also be used to make comparisons about numbers and ratios over time. Ratios are a way for organizations to compare themselves with competitors and the industry. (Finkler, Kovner, and Jones, 2007). There are four major ratios that financial statements analyze 1) liquidity 2) activity 3) leverage and 4) profitability. The financial statement for Mayo Health System

Secondary information is collected for this case. This case study limited only one techniques of financial analysis that is Ratio Analysis and also taken a single company. Thus the conclusion of the analysis carried out in a professional manner will be able to correctly describe the evaluation of the company and to substantiate the user’s decisions.

Regardless we now know that health care is classified as a major business. We have for profit organizations, not for profit organizations and government organizations to supply the increasing demand for health care products and services. Each organization will be a product of their funding that they have or receive. The decision will be made from several different levels and areas within the organization, and they all have to report back to the stakeholders.

The Northeast Health Council, INC was established in 1993 to meet the primary healthcare needs of the residents of the Northeast through a not-for-profit community-responsible approach.

Ratios are highly important profit tools in financial analysis that help financial analysts implement plans that improve profitability, liquidity, financial structure, reordering, leverage, and interest coverage. Although ratios report mostly on past performances, they can be predictive too, and provide lead indications of potential problem areas. Financial ratios are important because they help investors make decisions to buy hold or sell securities.

Ratio analysis is a tool brought by individuals used to evaluate analysis of information in the financial statements of a business. The ratio analysis forms an essential part of the financial analysis which is a vital part in the business planning. There are 3 different ways of assessing businesses performance and these are: solvency, profitability and performance. Ratio analysis assists managers to work out the production of the company by figuring the profitability ratios. Also, the management can evaluate their revenues to check if their productivity. Thus, probability ratios are helpful to the company in evaluating its performance based on current earning. By measuring the solvency ratio, the companies are able to keep an

from the operations, and it also includes other decisions related to the investment t and interest and depreciation expense. The other ratio that is required by a health care organization is the day’s cash on hand, his ratio is incubated in the liquidity measure, it is the measure of an organization to hold and support its operating expense without collecting any additional cash for them. The last in the list is the capital spending, it is the measure of an organization which measures the capital expenditure as a percentage of annual depreciation expense. The limitation of financial ration and operating indicator analysis are as follows, it is an retrospective approach because there is no prospective examination, the ration data is not based on the economic data rather than the accounting, it doesn’t capture significant off balance sheet its and the financial statement

The paper illustrates that financial ratio analysis is an important tool for firm’s to evaluate their financial health in order to identify areas of weakness so as to institute corrective measures.

The intention of this research paper is to further understand the financial statement of four distinct hospitals located in the San Diego, California County. An analysis of the financial report for Sharp HealthCare, Scripps Health, Tri-City HealthCare, and Palomar Health will be briefly discussed individually on each important financial outcome’s Such as: assets, liabilities, revenue, expenses, hospital debt, and investments. To analyze further, a break down between the hospitals assets, liabilities, and revenue will be compared in the paper.

It is important for healthcare organizations to understand their present performance and weak areas in order to generate more effective operational strategies. Financial ratio analysis is an effective tool to determine hospital’s performance on several indicators such as ability to pay debt, capability to generate revenue, and sales performance etc. The objective of this paper is to describe role of different financial ratios in understanding organizational performance and in developing new strategy. The paper also presents comparative ratio analysis of local healthcare organization and industry

This is the first pace in financial. It is the duty of financial manager to primarily recognize the goals of the company. The subsequently responsibility is to decide on the suitable steps that have to be applied achieve the goals of the company (Baker and Baker, 2007, p. 6).

The hospital industry consist of privately and publicly owned and operated hospitals and medical facilities. The financial backgrounds of these assorted categories of organizations are sizeable and contrasted. Therefore, industry ratios are to be considered and evaluated from a greater proportion in order to identify with the financial data involving the industry as a whole (Dunn & Becker, 2013). Based on analysis and evaluation of the financial ratios gained from Nasdaq and Google Finance, it is apparent that the hospital industry is gradually rising and supports increase in profitability. These ratios are divided into several categories: Growth rates, financial strength, valuation, profitability, efficiency, dividends, and management effectiveness.

Before beginning an analysis of a company it is necessary to have a complete set of financial statements, preferably for the pas few years so that historical trends can be obtained. Ratios are a way for anyone to get an idea of the financial performance of a company by using the information contained in the financial statements. Ratios are grouped into four basic categories, liquidity, activity, profitability, and financial leverage. This document will use a variety of these ratios to analyze the firm, Sample Company, as of December 31,2000.

The calculation of ratios is the calculation technique for analyzing a company’s financial performance that divides or standardize one accounting measure by another economically relevant measure. Financial ratios can be used as a tool to demonstrate financial statement users for making valid comparisons of firm operating performance, over time for the same firm and between comparable companies. External investors are mostly interested in gaining insights about a firm’s profitability, asset management, liquidity, and solvency.