Profit Making Versus Non-Profit Making Organizations

In the healthcare sector financial management is the effective and efficient use of funds (money) in such a manner that the objectives of a certain organization are attained. The financial management role is purely reserved for the top management. The process of financial management entails controlling, directing, organizing and planning the financial activities, for instance, the procurement of healthcare utilities and the use of funds in the healthcare institutions (Brigham & Ehrhardt, 2017). Some of the factors driving change in the healthcare delivery include the widespread use of technology, the transition to the value-based care and the growing influence of consumerization

Question 2

Balance sheet

assets

Net property and Equipment

2000

account receivable

3000

Cash and cash equipment

97000

Net Assets

61500

net assets released from restriction for operations

45000

less provision for bad debts

12000

Total assets

220500

Total liabilities

long-term debt

3500

medical claim payable

37500

shareholder equity

179500

total liabilities

220500

Statement of Operations

statement of operations

Patient service revenue

950000

fewer expenses

depreciation  expense

35000

supply expense

255000

Labour expenses

300000

590000

Total revenue

360000

Question 3. Profit Making Versus Non-Profit Making Organizations

The profit-making organizations prepare the financial statements with the intention of calculating the profit or revenue that is later on distributed to the ordinary shareholders while the non-profit making organization basically prepare financial statements to determine the surplus (Brigham & Ehrhardt, 2017). For non-profit making organizations transactions are recorded basically for bookkeeping purposes but for the profit-making organization, they show financial performance or status of the company.

Question 4

The operating margin ratio estimates the company operating efficiency and pricing strategy. The ratio is calculated by finding the ratio of operating income and total assets while the return on total asset ratio estimates the amount of revenue that is generated by a unit of the asset.

The operating expense per adjusted discharge ratio estimates the firm’s total liabilities relative to the aggregate assets while the operating revenue per adjusted discharge compares the firm’s revenue to its net assets.

References

Brigham, E. F., & Ehrhardt, M. C. (2017). Financial management: Theory and practice. Boston (MA: Cengage Learning.