Three Key Components Of A Financial Statement Analysis

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There are three key components of a financial statement that any business manager should be aware of. The first, and one of the most important, is the income statement. It measures a hospitals profitability by tracking revenues, expenses and profit margins. The second, the balance sheet, “is a representation of the accounting equation of liabilities plus equity equal assets.” (Langabeer II, J. R., 2016, p. 60). It is a document prepared at regular intervals and gives stakeholders an idea of what the business is worth at a particular point in time. The third key component is the statement of cash flow. It represents the flow of cash in and out of the organization. It is important for a manager to understand this information in order …show more content…
has required businesses to be more fiscally responsible however, there are still areas that need to be addressed. The increased cost of treatments and procedures has driven third party insurers to change how they reimburse. There is still opportunity to change not only how, but for what. Dr. Jeffrey Brenner identifies two things that influence the cost of health care delivery in the U.S. in his Ted Talk, Healthcare: Reversing Cost and Quality in America’s Poorest City. Dr. Brenner suggests the lack of contact or time spent with the provider and misapplication of technology as factors that drive healthcare costs up (TED, 2013). He states “Physicians are not paid to stay in the room” (TED, 2013). Providers and hospitals are reimbursed more for hospitalizations and procedures than proactive health care or patient education. An example he gives is of a patient who had uncontrolled blood sugars over a period of time requiring frequent emergency room (ER) visits. When an outreach team went to see the patient at home and reviewed his diabetes management regime they discovered the problem could have been recognized earlier by spending more time with the patient. Our health care delivery system is “volume based,” which means you make more if you “run from room to room” (TED, 2013). Dr. Brenner identified two studies by the New England Journal of Medicine which demonstrated patients are receiving certain procedures they do not need in order to make money. “They are taking good technology and misapplying it” (TED,

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