FINANCIAL ANALYSIS

Financial Analysis

Barts & the London NHS Trust

Introduction

The main aim of the paper is to highlight the appropriate forecasting methods to enable cost and revenue forecasts to be constructed for the Barts and The London NHS Trust for the year 2013-2014. On the other hand, the available sources of funds are also appraised later in the research paper.

Discussion

In order to forecast revenue we need top determine the cost model first so that we can arrive on a concrete and justified conclusion there are a number of methods i.e. Cash Flow Forecasting, Cost Forecasting, Price Forecasting, Time Series Methods. On the other hand, managers need to abreast their skills with the forecasting methods. Different forecasting model works in different situations. It merely depends on the nature and scope of the business that which forecasting technique better addresses the concerns of the mangers. Therefore, the appropriate revenue and cost model is a sequential and step wise practice i.e.

Regardless of the size and performance there are certain expected costs known as fixed cost?

Other varying and moving prices are known as variable costs.

The accuracy of the results depends upon the model which is used to determine the future. In order to determine and forecast the future cost these variable and fixed costs needs to be analyzed first because:

Total Cost = Fixed Cost + Variable Costs

The fixed cost includes: Utilities, rent & salaries on the other hand, variable costs includes: COGS, Direct Material Cost. In order to be on the safe side, the estimate is done a little bit more than the actual estimated figure.

There are two sides of the revenue forecasting methods i.e. conservative and optimistic and can be differentiated into quantitative and qualitative methods:

The quantitative method includes: (Incremental, Moving Average, Time series Simple Regression)

Incremental Method

Expected = Actual + Incremental

Moving Average Models

Expected t+1 = Average (Actual t, Actual t - 1- …Actual-t -n-1)

t = Time Horizon

Time Series Simple Regression Model

Expected t = intercept + (slope * year)

Best Fit Forecasting Model

From the above methods the beast fit method according to my judgement are as follows:

Compare the cost of and revenues with other industry players.

Previous year historical data related to cost and revenues and then make the targets andd cost estimates

Through Appropriate Guessing formula

When you are estimating cost for the plan for the first time the most apply the most widely used methods check the cost of the other industry peers ...