Finance And Accounting: A Case Study Of Determining Financial Viability

933 Words 4 Pages
Determining Financial Viability
Decisions for financial viability are based on the expertise of a financial leader that has a thorough understanding of the financial condition of an organization (Kaufman, n.d.). Several factors that should be reviewed for understanding are equity of the business, cash on hand and long term debt. Finance and accounting are key contributors within the organization for sharing of financial metrics to the governing board, senior leaders and to individual cost center managers. These metrics are clearly defined and provide an overview of the financial picture and forecast (Cleverley, Song, & Cleverley, 2011). This paper will discuss the partnership of finance and accounting along with the importance of the two in
…show more content…
Healthcare leaders have always been faced with questions on how to have metrics that can identify accurately and comprehensively the performance of an organization over time (Fibuch and Ahmed, 2013). The report out of information will be crucial to the financial viability and longevity of that entity.
Several key metrics in determining financial viability are expense management, actual revenue growth, return on assets, capital costs, debt free cash flow and excess cash flow (Key financial metrics - 12 indicators for business analysis, n.d.). These metrics can be presented through balanced scorecards and a dashboard. The scorecard can provide key information on a subset of areas for performance. The balanced scorecard is used “to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals” (Wilsey, 2016, para.1). Dashboard drivers are focused on identified high priority areas that can cause changes in an organizations performance (Cleverley, Song, & Cleverley, 2011). Dashboards “present key financial data on one or two pages, enabling executives and trustees to track performance of important indicators on a regular basis” (Kaufman, n.d., p.
…show more content…
Their responsibilities are to have a clear understanding of financial metrics along with policies and procedures to help maintain the operating margin needed for success. Financial stability advances growth and sustainment of an organization (Cleverley, Song, & Cleverley, 2011). Being ahead of financial changes, whether good or bad, will alleviate any undo losses that could have been prevented.
In conclusion, accounting serves to provide information to the finance team which will allow for decision making that will lead to operational success, short term and long term. Alignment to the mission of the organization is crucial as it provides a clear and concise vision for all to follow in order to meet financial goals. Financial viability will only be obtained if there is a partnership for understanding between the two

Related Documents