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Deliverable Length: 2,000–2,500 words including title page and references As a health care manager, daily management tasks include financial management. Financial management includes items such as labor cost, equipment cost, and a budget that controls the operations. Operations require management planning and control. The budget is created using the basic financial information and accounting principles information that an organization reports 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. .

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Introduction The budgeting process is an attempt to establish a set of realistic standards for operating a health care organization. The budget is a set of specific objectives for the year ahead. The finance system provides the cost and revenue data and sometimes assists with other measures. Formulating a budget is the beginning of the process. Every budgeting system must contain provisions for preparing the budget and implementing a system. This system must include coordination, control, follow-up, and maintenance. An effective budget must be tailored to the organization’s specific needs. The budget must be comprehensible and attainable. There should be innovation and flexibility to meet unexpected occurrences. A health care organization’s budget provides a fully detailed description of expected financial transactions, by accounting period, for at least an entire year. The review of future expectations is useful in making smooth progress toward financial goals. The major parts of an annual budget address operational and financial planning needs. The operating budgets are made up of the following: · Expenditure or cost budgets anticipated by reporting period and responsibility center: Costs are often identified as fixed, semi-variable, or variable. Anticipated volumes of demand or output are incorporated into cost budgets. · Revenue budgets reflect the receipt of income from services rendered. Standard gross revenue accounting reports a profit increase to the responsibility center, creating an incentive for productive activity. · Income and expense budgets consist of expected net income and expenses incurred by the organization. · Financial budgets embrace the effects of the organization’s financial decisions. These plans include a budgeted balance sheet that shows the effects of planned operations and capital investments on assets, liabilities, and equities. The plans also include a cash budget that forecasts the flow of cash and other funds in the business. · Cash budget is for cash planning and control, presenting expected cash inflow and outflow for a designated time period. The cash budget helps management keep cash balances in a reasonable relationship to needs. You must know how much cash will flow in and out of the organization. You must also have an idea when these will take place. The cash budget is primarily used to spotlight periods of too little or too much cash rather than for continual control. · Capital budgets are lists of proposed capital expenditures and new or significantly revised programs, with the implications for the operating and cash budgets by period and responsibility center. The capital budgets include all anticipated expenditures for facilities and equipment and for sources of funds. Cost accounting is the process of determining the full and incremental costs of providing services and goods to patients and customers. To determine the full cost of providing a service, you must ensure that all costs are in.

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1 4. Describe the financial approach to strategic healthcare planning, considering how managers can participate most effectively in this process. 4.1 Explain the purpose of the activity statement and statement of cash flows. 4.2 Discuss the process of recording financial information and generating a balance sheet. 4.3 Discuss various asset categories, including cash, marketable securities, accounts receivable, inventory, prepaid expenses, fixed assets, and sinking funds. Reading Assignment Chapter 10: Taking Stock of Where You Are: The Balance Sheet Chapter 11: Reporting the Results of Operations: The Activity and Cash Flow Statements Unit Lesson In Unit VI, you will discover that financial reports are prepared by organizations monthly, quarterly, and annually, and that these reports are essential for determining the financial health of a healthcare organization. In order to function effectively in healthcare management, you need a very thorough understanding of these reports and what they reflect about your department and your medical facility overall. A good portion of each healthcare board of directors meeting is focused on reviewing and interpreting these reports. Financial reports help managers understand the current financial situation of the organization and also the financial results of its operation. They provide information not only for management of the organization, but also for outsiders—for people who take interest in the stability of the organization as it strives to fulfill its mission of patient care. Just a few of these parties include auditors, local government officials, the state department of health, and various accrediting agencies. Preparation of the financial reports which will be examined by individuals external to the organization is referred to as financial accounting. Financial accounting employs a process of recording financial transactions, summarizing all of the information contained in the transactions, and then reporting the information in a set of standardized financial statements. Balance Sheet The statement of financial position (commonly referred to as the balance sheet) is the first of the financial statements. You need a solid understanding of the balance sheet. A balance sheet reports the financial position of the organization at a moment in time—often the end of a month or end of the fiscal year. For any specific entity, this financial document provides a highly summarized view of its financial position at any one point in time. Financial statements are derived from information contained in and changes to the fundamental equation of accounting. That equation states that the assets of any entity equal the liabilities plus the net worth of the entity. All of financial accounting is built around that fundamental equation. In addition, many organizations follow a set of rules or conventions that are referred to a Generally Accepted Accounting Principles (GAA ...

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