Application: The Use of Key Financial Statements and the Management of Cash Flow in Organizations
A health care organization’s fiscal stability and operational viability can be gauged by reviewing the wealth of information captured within its major financial statements, as well as by ascertaining that organization’s availability of sufficient funds to sustain daily operations and to pay for day-to-day expenses in a timely manner.
To prepare for this Application Assignment, review the information on financial statements, cash flow, and the evaluation of organizational financial health presented in this week’s Learning Resource readings and discussed by the presenters in this week’s Course Media. Next, research methods (such as ratio analysis) that may be utilized to assess the financial status of healthcare organizations. In conducting your research, use both scholarly journal databases and resources available on the World Wide Web from reputable organizations, such as industry associations.
To complete this Application Assignment, write a 2 page paper in which you address the following:
Provide a description of a balance sheet, income statement, and a statement of cash flows and explain how these key financial statements relate to one another. In particular, describe at least one financial ratio or other method that may be utilized to assess each of these key concerns about an organization’s financial health:
Its ability to meet its debt obligations
Its ability to generate adequate operating profits
Its ability to effectively manage its working capital and/or cash flow
Describe how adopting health information technology could result in changes to an organization’s cash flow in the short- and long-term.
