Financial Terminology Paper

[Name of the Institute]Financial Terminology Paper

Introduction

Financial management in health care sector has become extremely important. All the professionals of health care system are required to understand the essentials of financial management. The choices in financing have an impact on the efficiency on the production and supply of health care services.

Discussion

Balance Sheet

Balance sheet is a financial statement that shows the summary of liabilities, assets, and shareholders' equity of a company at a particular time (Cleverley et.al, n.d.). These three segments of balance sheet give an overview to the investors regarding what the company owed and owns along with the invested amounts of the shareholders. It is calculated by the formula:

Assets = Shareholders' Equity + Liabilities Shareholders' Equity

Share holders' equity is defined by the total liabilities of the company subtracted from its total assets. It shows the amount by which an enterprise is financed through preferred and common shares. Shareholder's equity is also known as the net worth or share capital. It is calculated by the formula:

Shareholders' equity = Assets - Liabilities

EBITDA

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is an indicator financial performance of a company. It is calculated by the following formula:

EBITDA = Revenue - Expenses (interest, depreciation, tax, amortization)

It is the net income of the company with depreciation, tax, interest, and amortization added to it. It can be used to compare and analyze profitability between industries and companies as it eradicates the accounting and finance decisions.

EBITDAM

EBITDAM stands for Earnings before interest, taxes, depreciation, amortization, and marketing expenses. It is a supplemental measurement of finance of a company used to evaluate its operating performance.

Financial Ethics

Financial ethics consists of an objective evaluation of the impacts of trust on efficiency, honesty on valuation, and self-interest on altruism (Baker & Baker, 2011). It is a form of professional ethics that examines ethical problems and principles in a financial business environment. It includes accounting ethics, stock market ethics, banking ethics, investment ethics, tax ethics and so forth.

Financial Benchmarking

Financial benchmarking is a process of comparison of a company's performance standards and business practices with other companies of the same industry. Time, quality and cost are the main factors that are required to be compared. In this way, a company gets a good picture of its efficiency, competitiveness, and productivity.

Financial Trend Analysis

Financial Trend Analysis is the process of evaluating a company's financial statements for any ongoing relationship. Generally, an analysis is made to determine the direction in which a concern is going, its speed, and whether there are sufficient resources available to complete the projects that have been proposed.

Ratio analysis

Ratio Analysis is a tool that is utilized for conducting a quantitative analysis of information in the financial statements of a company. Ratios are calculated from present year numbers. They are then compared to the number of last years, industry, , economy, and other companies in order to judge the company's performance.

Application of the financial terms to health care finance

The professional of the health care sector are required to study ...