Health Management Associates



Financial Statement Analysis - Health Management Associates

Introduction

The present study focus on analyzing the internal analysis of the financial statement of the health management associates. The study covers the review of the health management associates and analysis of the financial statement of three years for highlighting the key insight of the financial health of the company, focus on the financial statement through various different groups like employees, investors and shareholders. Also the study identifies the current industry trends which have the most significant impact on the organizational financial performances and the recommended strategies used for increasing the performance of the organization.

Discussion

Financial Statement

Financial statement is sued for reviewing the financial condition of the overall organization. The company owners, stakeholders, directors, employees, investors, customers and suppliers use the financial statement for getting the knowledge of the future. Future analysis is very much important for making the decision regarding investment of funds. A health management associate had the higher current assets as compare to the current liabilities which showed that an organization was able to payoff its short term liabilities. Also the health organization had the 81% liability and only 19% equity which showed the inefficiency occurred in the health management associates (Baker, 2011).

An organization has the 100% gross profit margin in the fiscal year 2010, 2011 and 2012 while the net margin of the organization was 2.8% only which showed the increasing expenditure of the health management associates and the operating profit margin was only 10.45%. The operating profit margin of the organization was reduced because of the different expenses occur in the research development, general expenses and administrative expenses (Baker, 2011).

Reaction to the Financial Statement

Financial statement is very important for the perspective of the investors, shareholders and employees. As debt management ratio is used for the measurement of the firm's ability in order to pay its long term liabilities. So this ratio is very much necessary for the investors and shareholders. Through the look of debt management ratio, investors analyze whether to invest in the organization or not. The higher ratio indicates the risk associated with the business operations. The debt ratio of the health management associates was 81% which showed the bad sign of the organization. Investors never invest in the organization with so much debt ratio because the organization's is running on the long term liability and debt (Health Management Associates, 2013).

Net profitability ratio of the organization was 2.8% to 2.5% for the past three years which showed that the health management associates was running on the full efficiency. This ratio is important for the investor and shareholders. High profitability ratio indicates the low risk in the investment decision while low profitability ratio indicates the high investment risk. Gross profit is divided into two perspectives. One amount of net profit is given to the shareholder as the portion of the dividend while other is retained in the retained earning for further use. Health management associates did not have the good profit which provided the low amount of ...