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Reporting & Measuring Financial Results Lecture
Like the book describes, i’m not trying to make you accountants or delve deep into accounting practices,
however we do need to be able to understand some basics about financial statements.
In this module, we will look at 3 sections. The first is understanding the major reports, the second is how to
take that information and use ratios to determine the health of the organization and the third is to
understand the time value of money. I tried to make this module more theory and general than accounting
and finance, however some math needs to be done to understand the theory.
The major reports in chapter 11 are the balance sheet, income statement, and cash flow statement. An
accountant usually prepares these reports but it is your job as a financial manager to control them. When
using the word control, I mean adjust, make decisions by, and to forecast future opportunities and
weaknesses.
To be able to understand control, chapter 12 will go over financial, operating, and performance measures.
Each measure can help a financial manager make important decisions on the direction of the organization.
The last chapter in the module is chapter 13 and it discusses the time value of money and briefly talks
about three ways to make a financial decision. These are the payback method, the internal rate of return
and the present value analysis. In order to begin those calculations, you really need to understand net
present value so we will go over some examples for practice.
This is the assignment:
1. Review table 14-5 (p.152) operating room operating data and choose 3 expense items that look
interesting to you. Take special note to the expenses that have the most % change.
a. Complete and show the math (even though it is completed for you) the common sizing (vertical) % of all
three you chose.
b. Complete and show the math (even though it is completed for you) the trend analysis (horizontal) % of
all three you chose
c. Develop some questions you would want to ask of why such a variance between comparative expenses
from current year and prior year ( remember you are not the accountant or the manager to solve the issue
but the investigator to control these management issues).
2. Are you or your immediate supervisor involved with staffing decisions? If so, are you aware of how
staffing forecasts are prepared in your organization? Describe an example
3. As a manager, you must either review or prepare required data, your responsibility is to recall and apply
the elements of consistency. Why?
4. If you reviewed a budget at your workplace do you think the major increases and decreases could be
explained? Why or why not?