Prior to completing this assignment, review Chapter 10 and 12 in your course text.You are a mid-level manager in a health care organization and you have been asked to prepare a report, with appropriate exhibits, for the senior financial officer.Discuss the roles played by financial ratios in general and analyze the commonly used financial ratios by categories.Additionally, select a local hospital and compare its financial ratios for the most recent three years against the national norms for this type of institution. Include analytical comments and how the organization compares to the national norms as well as any suggestions as to how results could be improved.Your paper must include an introduction, thesis, and conclusion. Your paper must be four double-spaced pages in length (excluding title and reference pages) and formatted according to APA style as outlined in the Ashford Writing Center. Utilize three scholarly and/or peer-reviewed sources (excluding the course text) that were published within the last five years. Cite your sources within the text of your paper and provide complete references for each source used on the reference page.
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Introduction:
Financial ratios are crucial tools for assessing the financial health and stability of healthcare organizations. These ratios analyze the financial data of an organization and assist in determining its long-term viability. Medical college students must be aware of financial ratios and their significance in assessing the financial health of a healthcare organization. This assignment aims to discuss the roles played by financial ratios, analyze commonly used financial ratios by categories, and compare the financial ratios of a local hospital against national norms.
Roles Played by Financial Ratios:
Financial ratios are used to assess the financial health of an organization. These ratios help in determining the organization’s profitability, liquidity, asset management efficiency, and overall financial stability. Financial ratios also help in identifying financial weaknesses and areas that need improvement.
Commonly Used Financial Ratios by Categories:
Financial ratios can be categorized as liquidity ratios, asset management ratios, debt management ratios, and profitability ratios. Liquidity ratios measure an organization’s ability to meet its short-term financial obligations, such as paying bills and salaries. Asset management ratios measure the efficiency of an organization in utilizing its assets to generate revenue. Debt management ratios measure the company’s ability to manage its debt and financial leverage. Profitability ratios measure profits in proportion to sales, assets, or equity.
Local Hospital Financial Ratios:
When comparing the financial ratios of a local hospital against national norms, we can obtain information regarding the organization’s financial performance. It also highlights the strengths and weakness of the organization. For example, if the local hospital’s liquidity ratio is high, it indicates that the organization has enough cash to meet its short-term financial obligations. In contrast, a low liquidity ratio indicates the opposite.
Analytical Comments and Suggestions for Improvement:
After analyzing the financial ratios of the local hospital, it is essential to provide analytical comments regarding the organization’s financial situation. By comparing the financial ratios to national norms, we can highlight the institution’s strengths and weaknesses. We can also suggest strategies to improve the organization’s financial performance, such as reducing debt or increasing revenue streams.
Conclusion:
Financial ratios are crucial tools for evaluating the financial health and stability of healthcare organizations. Medical college students must be aware of financial ratios and their significance in assessing a healthcare organization’s financial health. Conducting a financial analysis of a local hospital and comparing it with national norms provides valuable insights into the organization’s financial performance. The analysis and recommendations provided based on this evaluation can help the organization improve its financial stability and overall financial performance.
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