Financial Statements
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Running head: FINANCIAL STATEMENTS
Financial Statements
Professor Laura L. Forbes, PhD, MHA, MCHES
Health Financial Management– HSA 525
January 27, 2013
Financial Statements
Healthcare organizations record financial information periodically in the form of financial statements. These statements can illustrate how profitable the organization is or how much it has deteriorated over a period of time. Fortunately, successful financial management plays an important role in many not-for-profit hospital’s efforts to boost profitability, build equity capital, and thus remain financially viable over the long term (Singh & Wheeler, 2012, p. 333). There are only four statements required by the General Accepted Accounting Principle (GAAP), and they are a balance sheet, income statement, statement of owner’s equity, and a statement of cash flows. The purpose for a balance sheet is to show the business’s financial position during any time point, based on how the liabilities and equity add up to the assets. An income statement is known as profit and loss statement, and consists of any income and expense accounts acquired over a specified time period. This is how stakeholders know how well the business is doing after expenses. It illustrates the difference in equity from the beginning and end of a specific period. A statement of shareholders’ equity gives an explanation of changes that may occur in retained earnings, and it is impacted by dividends and income. The final statement is a statement of cash flow summarizes sources and the flow of cash in and out of the business. It reports all changes over time instead of absolute dollar amount during a time point, and helps to determine if the business is capable of paying its bills.
Amazingly, each one of the financial statements above is linked in some form. The balance sheet’s assets and liabilities changes are also represented on the income statement under the revenues and expenses, which gives the outcome...
Financial Statements
Professor Laura L. Forbes, PhD, MHA, MCHES
Health Financial Management– HSA 525
January 27, 2013
Financial Statements
Healthcare organizations record financial information periodically in the form of financial statements. These statements can illustrate how profitable the organization is or how much it has deteriorated over a period of time. Fortunately, successful financial management plays an important role in many not-for-profit hospital’s efforts to boost profitability, build equity capital, and thus remain financially viable over the long term (Singh & Wheeler, 2012, p. 333). There are only four statements required by the General Accepted Accounting Principle (GAAP), and they are a balance sheet, income statement, statement of owner’s equity, and a statement of cash flows. The purpose for a balance sheet is to show the business’s financial position during any time point, based on how the liabilities and equity add up to the assets. An income statement is known as profit and loss statement, and consists of any income and expense accounts acquired over a specified time period. This is how stakeholders know how well the business is doing after expenses. It illustrates the difference in equity from the beginning and end of a specific period. A statement of shareholders’ equity gives an explanation of changes that may occur in retained earnings, and it is impacted by dividends and income. The final statement is a statement of cash flow summarizes sources and the flow of cash in and out of the business. It reports all changes over time instead of absolute dollar amount during a time point, and helps to determine if the business is capable of paying its bills.
Amazingly, each one of the financial statements above is linked in some form. The balance sheet’s assets and liabilities changes are also represented on the income statement under the revenues and expenses, which gives the outcome...