Financial Statement Review Essay
Financial Statement Review
Patton-Fuller Community hospital is committed to offering our patients innovative medical services. This is not possible if the financial staff does not take steps to ensure the relationship between sources and expenses reflect positive results. Understanding the differences between the audited and unaudited financial statements will allow the facility to balance its finances. We will evaluate the effects of revenue sources for planning and control. Examining the differences between 2008 and 2009 financial statements will help pinpoint if there were positive or negative changes and why. This will allow us to identify how we can work more efficiently fund necessary advancements of our medical services (Patton-Fuller Community Hospital, 2006) Financial Statements Review
The first difference between the audited and unaudited statements is with Patient Accounts Receivable. For 2009 the total in the unaudited form is $59,787, and the audited is $58,787 which is a difference of $1,000. The second difference is in the Statement of Revenue and Expense report. Under the Provision for Doubtful accounts for 2009, the unaudited statement has a value of $13,797, where the audited statement has a value of $14,797 – a difference of $1,000. Under the same statement, operating income for 2009 was reported as $689, but after audit it was found to be -$311, a difference of $378. These changes made a difference in the net income from the unaudited statement of $627 to -$373 in the audited statement. Effect of Revenue Sources
With any company the revenue will come from many sources, which will include the interest on loans, income from renting or leasing, and the sale of goods. Patton Fuller Community hospital revenue comes from eighty percent inpatient activity, what is included in this is the surgical nursing, medical, surgery charges, and the intensive care unit charges. Then, the other twenty percent, of the revenue, from the hospital will come from the emergency department, and from any other outpatient services. Accountants will be the first ones to record the hospital information, on ledgers than they are transferred to the official financial statements. This will used to retain earning statements, income statements, statements of the cash flows, and the balance sheet are the four basic types of the financial statements that are hit by the revenue sources. Revenues and Expenses Grouping
Financial ratios show that they are not improving from the information given. Out of the eight ratios only two show improvement from 2008 to 2009. Current, quick, day’s cash, A/R days debt service coverage and liabilities to net worth are all showing that they have gotten worse since 2008. Looking at Patton Fuller liquidity we can determine that they are unable to cover their short term debt, due to current ratios, current assets compared to the current liabilities that decreased putting them in financial trouble. Patton Fuller shows that “The day’s cash on hand” has decreased it are determined that the company has less money available to pay daily operation debts. It also looks as if they are using their assets to generate income. As of 2009 the profit was much higher than for Patton Fuller than as of 2008. Patton Fuller as they have grouped expenses throughout different categories and departments it allows them to control the revenue and total expenses of the organization. It will also allow Patton Fuller to control expired and unexpired costs. As we know it is very important to keep track of all inflow and outflow of cash coming in and out of any organization.
The annual reporting of financial statement review of Patton-Fuller community Hospital showed profits and losses for the hospital. Audited and unaudited statements showed losses and profits incurred by the hospital within a two year period. Financial statements are important when reviewing profits and loses for current and previous year? Yes they are, financial statements allows management to review the areas that have fluctuations that negative affect the organization.
Baker, J. J., & Baker, R. W. (2011). Health care finance: Basic tools for nonfinancial managers. 3rd.ed. Sudbury, MA: Jones & Bartlett publishers. Patton-Fuller Community Hospital. (2006). Retrieved June 8, 2014, from Virtual Organizations Portal