The chief financial officer (CFO) of the hospital has asked for assistance. The CFO wants to create a document for new employees that explains financial information and the way it is used to evaluate a health care organization. You are asked to explain important concepts regarding the use of financial information.
Complete Parts 1 and 2 below.
Part 1: Financial Information
In the second column, thoroughly answer each question from the first column in your own words. In the third colum, provide a specific example related to the question and your response. Each response should be at least 50 words.
Cite at least 2 scholarly sources to support the answers to the questions (one can be the textbook).
Format your citations and references according to APA guidelines.
| Question | Response | Specific Example
(If the question asks for multiple responses, provide an example for each response.) |
| Example: What are the 3 types of business organizations? | The 3 types of business organizations are sole-proprietor, partnerships (LLC), and corporations (C-corp/S-corp). | A sole-proprietor would be a self-owned business such as an Etsy shop or a lawn maintence or cleaning service. An example of an LLC would be an accounting or law firm. An example of a corporation would be a retail store such as Walmart. |
| How is financial information used to operate a health care organization on a day-to-day basis? | ||
| What are cash vs. accural accounting methods? | ||
| What is a pro forma income statement? What is its purpose? | ||
| What is a prepaid expense? What is its purpose? | ||
| Why is it important to identify your internal or external key stakeholder of the financial data? | ||
| As a department head, when would you use a budget? How would you use it? |
Part 2: Short Answer:
Thoroughly answer each question below in your own words. Each response should be at least 50 words.
Example: Now that you have defined a pro forma income statement and its purpose, when would you use a pro forma income statement as a health care manager? The director of population health would like to purchase a new low-dose CT scan to perform a new service of lung screenings. The pro forma income statement details the expected volume, revenue, and related expenses.
1. Now that you have defined a pro forma income statement and its purpose, when would you use a pro forma income statement as a health care manager? How is this process similar to a budgeting process? Note: Your response must be different from the example provided above.
2. What is the importance of data analysis in the accounting process? How is it important to you as a health care manager?
3. What is depreciation and its 3 elements? How is straight-lined depreciation calculated? How is this used by health care managers?
The 3 basic tools for financial statements are ratio, horizontal, and vertical analysis.
4. What is the importance of ratio analysis? What are the four main categories? How would a health care manager use ratio analysis?
5. What is the importance of horizontal analysis? How would a health care manager use horizontal analysis?
6. What is the importance of vertical analysis? How would a health care manager use vertical analysis?
