¶ … financial analysis and more specifically financial ratios has been noted by Finkler, Marc and Baker (2007, p.253) to be important to managers since it can help them in making informed decisions. In this paper, we present the concept of ratio analysis as applied to healthcare facilities.
The concept and purpose of ratio analysis
Financial statement analysis is noted by Flex Monitoring Team (2005) to be very important to managers, boards, payers as well as lenders for them to effectively make the right judgments on the financial health of their organizations. Ratio analysis is one of the most accepted methods of assessing the financial health of an organization. The data that is used for ratio analysis is derived from income statements and balance sheets. It is a fact that most health care systems, hospitals as well as various other healthcare organizations routinely employ ratio analysis in evaluating their financial condition and then comparing the obtained values with those of other organizations or for previous periods. Their aim is to look out for any meaningful changes that may be exhibited in the differences obtained. Most healthcare organizations usually compare their own financial ratios with those of similar healthcare organizations in...
For instance it is very useful to compare the financial position of two or more Critical Access Hospitals (CAH) but very useless to compare the financial position of a major teaching hospital with that of a Critical Access Hospital (CAH). Such information may not be informative since these two categories of health care facilities have totally different organizational missions.
A large number of healthcare facilities are also noted to be in a quest of adopting the use of cost-effectiveness (CE) analysis in their decision making processes that are concerned with resource allocation (Eicher et al.,2004).
There are several types of financial ratios in use in assessing the financial health of organizations. Liquidity ratios for instance are used in measuring how easily a given firm can meet its various obligations. Profitability ratios on the other hand are used in indicating the earning potential of a given firm. Asset management ratios are used in measuring the efficiency of a given company turning its assets into sales. The Dent management ratios on the other had is important since they indicate the extent to which a given company is leveraged in terms of its own debt. These ratios also indicate how well as given firm can handle its debt using its operating income and assets. Finally, the Dividend/Market Value Ratios…
Ratio analysis is not used in as widespread a manner in government as it is in the private sector. While they are very necessary, they have to be adapted specifically to the unique problems of the public sector which is not based upon profit. These primary issues include the weaknesses in the way that the key information elements needed for the assessment financial condition is reported. Though reporting methods have
Small Business Owner: Financial Ratios Understanding concepts Financial analysis is one of the most reliable means of assessing an economic agent as it relies on quantitative data, which is unbiased, objective and which can be extrapolated. Still, despite these advantages of financial analysis, fact remains that its results can generate relative findings based on the characteristics of the assessed company. For instance, while a small size company would be more interested in
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Financial statements are produced in order to help stakeholders understand the financial condition of the entity in question. Different types of entities, however, have different reporting requirements. A self-employed individual has very different needs from a limited company, and these are different from not-for-profit organisations as well. This paper will examine some of these differences. The first class of business is the self-employed individual. There are no reporting standards for self-employed
Financial Analysis of Bestwish Limited Company Overview Bestwish Limited produces extensive range of quality products such as gift dressing, greetings cards, and plush merchandise of more than 50,000 stocks. The production of different categories of products involve between 2 and 15 processes. The company produces standardized products and custom designed products ordered from customers on contract basis. However, Bestwish Limited is facing challenges to control the costs because of varying production process,
The horizontal analysis showed that FedEx's profits in 2009 were just 5% of their profits in 2007. Given that EBIT contributes to the T3 component of the Z-score, which is the most significant component by weighting, this would explain why the Z-score dropped so much. The other major contributor to the Z-score is the drop in the company's market cap. The market cap is deemed important in part because