Financial Analysis Over the Last

Financial Analysis

Over the last several years, a wide variety of hospitals have been facing a number of different financial challenges. Part of the reason for this, is because of shifts in the population demographic and the reality that many facilities are unable to provide the kind of treatments that residents demand. As a result, a wide variety of health care facilities have been closing or relocating to areas where their profitability can increase. This has left many different regions with tremendous gaps in the kinds of treatment they are offering. Evidence of this can be seen by looking no further than a study that was conducted by the Robert Wood Johnson foundation. As, they determined many parts of the country are dealing with these kinds of possibilities. The most notable include: Philadelphia, Cleveland, Cincinnati, Saint Louis, Detroit, New York, Washington and areas of New Jersey. ("Growing Trend of Community Hospital Closures," 2011) This is problematic, because these issues mean that they underlying amounts of care will begin to decline in many regions of the country. To prevent a similar situation from happening to Major Medical Center requires conducting an analysis of: the auditor's opinion letter, the financial statements and examining any issues that may raise concerns. Once this occurs, it will provide the greatest insights as to the underlying issues that are affecting the facility.

A Review of the Auditor's Opinion Letter

The auditor's opinion letter is designed to provide the organization with various tools that they can use to objectively determine the strengths and weaknesses of the hospital. There are no red flags that have been raised, as they are indicating the facility has a strong financial foundation. (Finkler, 2010, pp. 558 -- 561)

Analysis of the Financial Statement of the Company

In the balance sheet, cash flow and income statements there are no unusual activities that are catching our attention. That being said, the organization has been increasing their overall amounts of financial strength. Evidence of this can be seen by looking no further than the improvements in the total amount of the sinking fund from: $13,410 to $16,410. This is significant, because the increases in these levels are an indication that the management is engaging in responsible financial practices to pay off of their debt obligations. (Finkler, 2010, pp. 558 -- 561)

Review the notes. Do any of them raise cause for concern?

When reviewing the notes, there is nothing unusual that is causing concern about any kind of sudden shifts in the financial strength of the hospital. (Finkler, 2010, pp. 558 -- 561)

What do you think of Major Medical Center's financial status? Explain your analysis

At the moment, Major Medical Center is in a strong financial position. However, between 2011 and 2012 the hospital has been taking steps that have been reducing their underlying financial standing. Evidence of this can be seen by looking no further than the decrease in: the quick, current, debt and debt to equity ratios. As, they have been declining from 2011 to 2012, which is highlighting how there are a number of financial challenges that the organization has been facing.