Financial Analysis of a Healthcare Organization

Financial Analysis of a Healthcare Organization

Introduction

Health and social care organizations provide valuable health and diseases related services to the customers. As a new hired manager, it is very important to evaluate the organization's financial strengths through the financial picture of a health care organization. The financial picture of an organization gives the basic understanding regarding the organization's financial reports system. It also delivers the information related to how the different parts of financial reports work and fit together to provide a logical picture of organization's value creation and circulation, its operation and development. The aim of this paper is to evaluate a financial picture of a healthcare organization keeping the contractual obligations like Medicare, Medicaid and Commercial payers in consideration.

Discussion

As a manger to perform the financial analysis following reports will be required:

Statement of Profit & Loss/ Income Statement

Statement of Affairs/ Balance Sheet

Statement of Cash flow

Statement of Changes in Equity

These statements together make a financial statement of an organization. In order to understand the financial position and financial strengths, one needs to calculate different financial ratios. Some of the basic financial ratios include profitability ratios, liquidity ratios, leverage ratios, efficiency ratios, capital budgeting ratios and market ratios. The contractual obligations influence the revenues of a health care organization as many patients get free services on contracts. The values for calculating these ratios can be taken from the financial statement of a health care organization (Bilcke et.al, 2011).

Balance sheet is also known as a statement of financial position. This statement provides the financial balances of an organization including Assets, Liabilities and Ownership equity. These items help the manager to take a snap shot of financial condition of the organization. Assets provide the picture of company's worth. Liabilities and ownership equity part tell what is the ratio of debt ...