The role of key financial statements in the management of organizations Kenneth Williams Walden University 3/15/2015 Introduction The financial management of health care institutions is of significant importance in light of the fact that virtually all their operations require considerable financing. The financial position of such institutions can be established in a number of ways including a general observation of the efficiency with which they dispense their mandate. An analysis of their financial statements however remains the most accurate and objective way of establishing their financial standing point (Fridson & Alvarez, 2011). This paper seeks to take a look at the various financial statements, how they influence …show more content…
Often referred to as a statement of financial position, the balance sheet is one of the most important financial statements used by business owners and even accountants to establish a company’s financial position as at a given period in time. A balance sheet, simply put, equates a company’s assets to its liabilities and shareholder equity often represented mathematically using the formula: Assets = Liabilities + Shareholder equity (Spurga, 2004). A balance sheet can therefore provide valuable information in regards to a company’s outstanding debts, the value of their assets, and other liabilities to business owners and even their suppliers. Healthcare institution managers can use their balance sheets to retrieve important financial aspects such as their debt, available liquid assets and supplies which in turn enable them to make effective decisions (Ciampa & Revels, …show more content…
Consisting of the operating and non-operating sections, an income statement, or a profit and loss statement, indicates how revenue received during the sale of products or providing a service, is transformed into net income via the deduction of the expenses incurred during operations. The income statement also enables companies to populate crucial data which can then be used to approximate the value of current liabilities and a business’ net income which are then used to balance out the two sides of the balance sheet (Spurga,