St. Michael's Hospital With For-Profit Hospitals Case Analysis

Decent Essays

Good morning, I appreciate the opportunity to meet with you to address concerns that have recently arisen in the media regarding the tax-exempt status of nonprofit hospitals. In particular, those concerns relate to the issues of patient collection tactics and partnerships with for-profit entities. I am here today to assure you that at St. Michael’s Hospital for Children, we are not only aware of the requirements to be classified as a nonprofit organization, but that we also work diligently every day to make certain we remain compliant with the established standards set forth by those requirements. We comply with GAAP standards for accounting. For any of you that are not familiar with that term, GAAP standards are the “authoritative …show more content…

Chicago, IL: HAP/AUPHA, Health Administration Press

Case B
What must you do to complete a financial analysis? There are three steps needed to prepare a financial analysis. The first step is to establish the facts about the organization, which would include reviewing the financial statements such as the balance sheet, statement of operations, statement of changes in net assets and the statement of cash flows. The second step is to compare those facts over time, to the facts of similar organizations and to include vertical, horizontal and ratio analysis in the process. Ratio analysis includes liquidity, profitability, activity and capital structure. The third step in preparing a financial analysis is to use judgement and perspective to evaluate the comparisons and make decisions (Norwicki, 2015).
What information do you need for both horizontal analysis and vertical analysis? Horizontal analysis is the “comparative study of a balance sheet or income statement for two or more accounting periods, to compute both total and relative variances for each line item” ( Vertical analysis is the “technique for identifying relationships between items in the same financial statement by expressing all amounts as a percentage of the total amount taken as 100. In a balance sheet, for example, cash and other assets are shown as a percentage of the total assets and in an income statement, each expense

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