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The Role of Financial Statements

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The Role of Financial Statements

Within the Discussion Board area, write one page that respond to the following questions with your thoughts, ideas,

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and comments. This will be the foundation for future discussions by your classmates. Be substantive and clear, and use examples to reinforce your ideas.

Understanding basic accounting principles is imperative to the health care manager role. Reading a balance sheet and recognizing the importance of cash flow are skills that are compulsory to this function. With this in mind, discuss the following:

Discuss the most important headings in a balance sheet and what the summary numbers mean.
Explain 4-5 reasons why cash flow is important to a health care organization.
Use 2 references to validate your response. Validation means that references have been used to prove your assertions and statements. Academic work is not what is thought to be true, but is what is researched to be true.

The Role of Financial Statements

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The Role of Financial Statements

As a health care manager, daily management tasks include financial management. Financial management includes

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items such as labor cost, equipment cost, and a budget that controls the operations. Proper operations requires planning and control. The budget is created using the basic financial information and accounting principles that an organization uses in its monthly, quarterly, and annual financial reports.

After learning the basics of financial statements, it is very important for a health care manager to understand the basic five areas of performance that set the financial plan for the organization. Define and provide an example of what the following mean:

Short-term solvency
Activity
Financial leverage
Profitability
Value
Define the following terms, and explain why they are important in a health care organization:

Current ratio
Total asset turnover
Debt ratio
Profit margins
Include a minimum of 2 references.