...evaluation of OHF finances will explain the financial position of OHF and offer recommendations to strengthen OHF’s financial position. Included in the evaluation will be an explanation of the principles of finance and how they relate to OHF, a comparison of net incomes and cash flows, a comparison of the market value of an asset and the book value, the addressing of OHF’s strengths and weaknesses and recommendations to further strengthen OHF. Principles of Finance and how They Relate to OHF The principles of finance are an important aspect of OHF. Leaders of every department and not just the financial officer and director should be aware of these principles. These principles include financial viability, accounting entity, money measurement, duality, cost valuation, accrual accounting, and stable monetary unit. To be familiar with the four major types of statements these accounting principles should be understood. The phrase “generally accepted accounting principles” is usually used to refer to the rules and requirements that form the preparation of the four financial statements. These financial statements are used to aid in decision making (Cleverly & Cameron, 2007). Financial Viability A successful health care organization (HCO) must be cost efficient. The HCO must collect dollar payments from the community that could include both patients and non-patients in the amount equal to at least the amount that it pays to its suppliers to be financially viable. To determine this one could...
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...processes of the business. Most health care organizations have significant changes within the industry; this is specifically because there are new trends available in the market industry which are impacted by the finance organization and the decisions that must be made. Most of the decisions within the health care industry are primarily reliant on the demand for health care services that are available to patients and the health care organization financial position. Health care administrators are enabling to analyze financial data obtained from financial report. These principles of finance report helps manager make well informed decisions. Principles of Finance The Omega Health Foundation is an example of principle of finance, which is “a complex business with two hospitals, Omega and Able Memorial, plus a number of related medical-service providers” (Cleverly & Cameron, 2007, p. 164).These principles of finances are risk-return trade off, time value of money (TVM), leverage, bond prices versus interest rates, portfolio effect, the matching principle, and liquidity versus profitability. By using the principles of finance it helps Omega Health Foundation because these are prepared to help the organizations financial statements and reports. Furthermore, the use of these financial statements like the balance sheet, income statement, statement of cash flows, and the statement of earning that offer management with a strong consideration of the health care organization’s finances and its...
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...Name: Samantha_______________________ Unit 4 Assignment Short Answer (2 @ 5 = 10) 1. List and discuss the three payment-determination bases. Cost base - —A payment system that uses provider cost, as opposed to charges, as the starting point to determine the amount of payment. A cost-payment basis simply means that the underlying method for payment is the provider’s cost. The rules for determining cost are specified in the contract between the payer and the healthcare provider. Fee-schedule -—The actual payment is predetermined and is unrelated to either the provider’s cost or the provider’s actual prices. A fee-schedule basis means that the actual payment is predetermined and is unrelated to either the provider’s cost or the provider’s actual prices Price related -—The provider is paid for services based on some relationship to its total charges or price for the services delivered to the patient. A price-related payment basis means the provider is paid for services based on some relationship to its total charges or price for the services delivered to the patient. 2. List and describe the three categories of net assets. Unrestricted net assets —All net assets (including those that have been restricted by management, the governing board, contractual agreements, or other legal documents) not restricted by donors. Temporarily restricted net assets – These are funds that can be used for a specific purpose only, or funds that may be released for...
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...Capital Budget Case- Delta Star Incorporated Description of the Company: Delta Star Incorporated is a family owned and operated convalescent care facility and the family owns other convalescent care facilities and non-related businesses. The owners want to expand their business and are considering constructing a new twenty six bed convalescent unit in a new area where the demand and reimbursement returns are similar to their present business. The second investment option being considered by Delta Star Incorporated is the construction of a new twenty six bed maximum care facility that would specialize in a maximum care equipment and care for patients requiring total respiration support and maintenance. The patient reimbursement rates are 20 percent higher in the maximum care facility, however the federal requirement for nursing hours per patient are 5 percent higher than a convalescent unit. The plan is to operate the new business venture for 10 years and then liquidate all assets. Beside the dilemma of investing in a convalescent facility or maximum care facility, the company is plagued by sloppy management and the owners believe that dietary and laundry operating costs are higher than necessary. The pro forma income statement for 1989 has not been adjusted upward for inflation for laundry and dietary services under the assumption that the future management will be more efficient and achieve a 3 percent reduction in these expenses which could affect the projected income...
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...Student 30991 Malak Rostom Masters of Business Administration Module 5 Operations Management Title Hotel-Dieu De France Beirut-Lebanon Word Count: 3,477 CONTENTS I- Executive summary 3-4 II- Introduction 4 III- Company Profile 4-5 IV- Problem and Processes Description 5-8 1- Problem definition 5-6 2- Patients flow model at hdf 6-8 V- patient Flow and Capacity Theories 9-12 3- Process mapping 10 4- theory of constraints 10-11 5- lean tools 11-12 VI- HDF processes evaluation from the capacity theories perspective 12-16 VII- Proposed changes and their effects on customer service 16-18 VIII- Final Recommendations and conclusion 19-21 IX- REFERENCE ...
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...impressive sales and profits to the investment community. Sterling’s financial measures for all recent years showed that the company was successful, but a time series analysis of these same financial measures quickly isolated Sterling’s current challenge: growth rates for unit volume, sales, and profits were very low, and company management was looking to expand into businesses and products with more potential for growth. Sterling had identified health care as an industry with more growth potential, and a detailed search for health care products which could fit well into the company’s existing operations led to discussions between Sterling and Montagne Medical Instruments Company. Sterling was interested in acquiring Montagne Medical’s germicidal, sanitation, and antiseptic products unit, and Montagne Medical was willing to sell the unit for the right price. Negotiations had revealed that Montagne Medical believed the right price was $265 million, so Sterling had to determine if acquiring the unit at this price would generate value for the company and its investors. Sterling Household Products: History, Finances, and a Strategic Opportunity Sterling was a leading manufacturer and marketer of consumer products, selling trusted and recognized brand names through mass merchandisers, grocery stores, and other retail...
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...Center Financial Review Elijah Heart Center is encountering a financial cash flow hardship, which is familiar for specialized health care businesses. This is a complex situation, which will require a number of strategies to assist in minimizing cost while increasing revenue and patient care, obtaining the newest technology, and expanding the facility without going further into the red. With this review, there will be decisions and measures implemented to improve the declining cash flow distress. There will be a three part review; cost cutting measures that will have minimum impact on the patients, improve the inventory of equipment, and the appropriate choice to expand. The initial requirement in this situation is to save the organization $900.00 for the first year and improving the cash flow problem immediately, while waiting to receive $2,300,000.00 from Medicare and other organizations. There are a number of cost cutting options, but depending on the combination chosen it can have a severe effect on the patients and organization. The options included downsizing (permanent) staff, changing the skill mix and a few areas (benefits, agency staff, and length-of-stay) of reduction. Therefore, as the individual in charge to make these decisions, I have chosen to reducing agency staff and altering or changing the skill mix. This will slightly affect the patients and will help alleviate the cash flow difficulties, along with having an annual savings for the organization of $3...
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...EDLIRA KASEMI 04/07/2013 WEEK 5 ASSIGNMENT Leasing is undertaken primarily for what purposes? A lease is basically an agreement among two parties for the hire of a benefit. The lessor is the lawful proprietor of the asset who rentals out the asset to the lessee. At the conclusion of the lease the benefit is refunded to the lessor. The lessee will wage a lease payment to the lessor in reappearance for the usage of the asset. The accounting action for the lease completely depends on the environment of the lease. For office purposes all leases are categorized into one of two categories, they are whichever deemed to be ‘finance leases’ or ‘operating leases’. Discuss the two major types of leases. Accounting behavior for operating leases The accounting actions for an operating lease is frank for together the lessor and the lessee. The lessee has experienced a working expense, so the lease rental owed is written off in the revenue and loss explanation. The lessee has to reveal in the notes to the explanations the amount charged in the year and the quantity of the expenditures to which the entity is dedicated at the year end. Accounting behavior of finance leases A finance lease is one wherever the dangers and prizes of the proprietorship pass to the lessee. When a lessee arrives into a finance lease it is receiving admittance to the risks and payments of the asset and therefore the lessee reflects substance by knowing the asset in its...
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...Capital Budgeting Process These are the six steps that organizations use when they are issuing bonds. These steps are: 1. The healthcare provider plans and prepares for the issuance process. (Cleverley, Chapter 21) 2. The healthcare provider gets evaluated by a credit rating agency. (Cleverley, Chapter 21) 3. The bond is rated by a bond rating agency. (Cleverley, Chapter 21) 4. The healthcare provider provides a note or lease to the governmental authority, the issuer of the bonds, via a trustee. (Cleverley, Chapter 21) 5. The governmental authority delivers the bonds to one or more investment banking firms. (Cleverley, Chapter 21) 6. The investment banking firms sell the bonds to investors at the public offering price, and the trustee provides the healthcare provider with the net proceeds. (Cleverley, Chapter 21) An alternative to traditional equity and debt financing is leasing. Leasing is undertaken primarily for what purposes? Leasing is undertaken for the primary purpose of protecting the organization from having to buy equipment that depreciates. Another reason is that it creates safe harbors for investment in healthcare entities, certain discounts for products, and for waiver of coinsurance or deductibles, among others. (Cleverley, chapter4) The two major types of leases are operating and financial. With an operating lease, sometimes called service leases, is a lease for a period shorter than the equipment’s economic life, usually cancelable. (Cleverley, pg...
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...Net Earnings per Common Share from Continuing Operations(1) Diluted Net Earnings per Common Share(1) Dividends per Common Share $84,167 $83,680 $81,104 $77,567 $75,295 14,481 13,292 15,495 15,732 15,188 11,312 10,756 11,797 12,736 13,436 13.5% 11.1% 14.4% 14.0% 14.1% $ 3.86 $ 3.12 $ 3.85 $ 3.47 $ 3.35 3.86 3.66 3.93 4.11 4.26 2.29 2.14 1.97 1.80 1.64 (1) Diluted net earnings per share are calculated based on net earnings attributable to Procter & Gamble. NET SALES OPERATING CASH FLOW DILUTED NET EARNINGS ($ billions) ($ billions) (per common share) 13 12 11 10 09 $84.2 $83.7 $81.1 $77.6 $75.3 13 12 11 10 09 $14.9 $13.3 $13.3 $16.1 $14.9 13 12 11 10 09 $3.86 $3.66 $3.93 $4.11 $4.26 2013 NET SALES BY GEOGRAPHIC REGION BY BUSINESS SEGMENT (2) 20% 24% 9% 32% 15% Beauty Grooming Health Care Fabric Care and Home Care Baby Care and Family Care (2) These results exclude net sales in Corporate. 15% 10% 39% 18% 18% BY MARKET MATURITY North America Western Europe Asia Latin America Central & Eastern Europe, Middle East & Africa Developed Developing 39% 61% A.G. Lafley Chairman of the Board, President and Chief Executive Officer Dear Shareholders, P&G is...
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...SUMMARY (UNAUDITED) Amounts in millions, except per share amounts 2009 2008 2007 2006 2005 Net Sales Operating Income Net Earnings Net Earnings Margin from Continuing Operations Diluted Net Earnings per Common Share from Continuing Operations Diluted Net Earnings per Common Share Dividends per Common Share $79,029 16,123 13,436 14.3% $ 3.58 4.26 1.64 $81,748 16,637 12,075 14.4% $ 3.56 3.64 1.45 $74,832 15,003 10,340 13.4% $ 2.96 3.04 1.28 $66,724 12,916 8,684 12.7% $ 2.58 2.64 1.15 $55,292 10,026 6,923 12.0% $ 2.43 2.53 1.03 NET SALES (in billions of dollars) DILUTED NET EARNINGS (per common share) 05 06 07 08 09 $55.3 $66.7 $74.8 $81.7 $79.0 05 06 07 08 09 $2.53 $2.64 $3.04 $3.64 $4.26 OPERATING CASH FLOW (in billions of dollars) 05 06 07 08 09 $8.6 $11.4 $13.4 $15.0 $14.9 Note: Previous period results have been amended to exclude the results of the Folgers coffee business from continuing operations. For more information refer to Note 12 on page 71. The Procter & Gamble Company 1 A.G. Lafley Chairman of the Board When I became CEO in 2000, P&G faced some of the most demanding challenges in the Company’s long history. We made the strategic choices necessary to get P&G back on track to sustainable growth. Overcoming the challenges in 2000 made us a better and more focused company, and in the years since, we have designed P&G to grow consistently and reliably....
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...budgeting is How to calculate and interpret a project’s: 2. Payback Period Discounted Payback Period Net Present Value (NPV) Internal Rate of Return (IRR) Profitability Index (PI) 3. How to choose projects when capital is rationed What is capital budgeting? Capital budgeting is the process of planning expenditure on assets or projects that can have a long-term impact on an institution. Examples of capital projects Adopting a new enterprise-wide software system Launching a new advertising campaign Replacing factory equipment Expanding sales into a new market Building a road Why is capital budgeting important? Helps firm make smart decisions Capital projects large and expensive- not easy to change course Allows management team to give input and be on same page Capital budgeting techniques include: Payback Period Discounted Payback Period Net Present Value (NPV) Internal Rate of Return (IRR) Profitability Index (PI) Payback Period- The Concept What is it? The payback period for a project is the expected time it will take to recover the original investment. The decision rule: Accept project if its payback period is less than the maximum allowed. Payback Period- An Example A project requires a $100,000,000 investment and is expected to generate the following cash flows in the years after the investment is made Year 1 2 3 4 5 Cashflow ($) 20,000,000 40,000,000 60,000,000 30,000,000 10...
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...Chapter 6 Property and Equipment and Other Assets Overview 6.01 Health care entities use various kinds of property and equipment. Those assets are generally significant to the financial position of institutional health care entities, such as hospitals and nursing homes. Typical accounts used to record property and equipment transactions are land, land improvements, buildings and improvements, leasehold improvements, equipment (fixed and movable), leased property and equipment, accumulated depreciation and amortization, and construction in progress. Health care entities also have intangible assets, which may be acquired in connection with business combinations or purchases, or developed from other resources of the entity. Intangibles with finite lives are amortized according to their useful life. Examples of intangibles include: Health Plans customer relationships, such as employer groups or members provider networks trademarks trade names software licenses favorable leases non-compete agreements goodwill Hospitals and other health care facilities licenses certificates of need managed care contracts goodwill Physician practices medical charts non-compete agreements managed care contracts goodwill 6.02 6.03 Supplies inventories are generally not very significant to the financial position of health care entities. However, because of the volume and cost of supplies used, they may be much more significant to operating expenses and the statement of operations. Supplies typically...
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...goal take care of those conflicts? In a large corporation stockholders (owners) are not involve in the day to day operation but the managers have the power to make decisions as to how the firms are run. Of-course, the stockholders want the managers to make decisions that are consistent with the goal of wealth maximization. However, managers’ interest can potentially conflict with owners interests. A conflict arises when the managers makes decision that are not in the best interest of the owner. These conflicts are greatest in large corporations with widely dispersed ownership. Wealth maximization goal can take care of those conflicts. Now a day’s wealth maximization is almost universally accepted as an appropriate operational decision criterion for financial management decisions. Its operational features satisfy ambiguity, timing of benefits, quality of benefits these three requirements. There are two arguments in favor of wealth maximization approach: 1. Exactness: The wealth maximization criterion is based on the concept of cash flows generated by the decision rather than accounting profit which is used in profit maximization approach. Measuring benefits in terms of cash flows avoiding the ambiguity associated with accounting profit. 2. The Timing of Benefits and Quality of Benefits: Wealth maximization approach considers both the quality and quantity of benefits. It also incorporates the time value of money as we can see that the value of esteem...
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...Course: Health Care Finance Readings MBAHC−4 California College for Health Sciences MBA Health Care Program McGraw-Hill/Irwin abc McGraw−Hill Primis ISBN: 0−390−55313−1 Text: Advanced Financial Accounting, Sixth Edition Baker−Lembke−King Harvard Business School Accounting Cases Corporate Finance, Seventh Edition Ross−Westerfield−Jaffe Harvard Business Review General Management Articles Harvard Business School Finance Cases This book was printed on recycled paper. Finance http://www.mhhe.com/primis/online/ Copyright ©2005 by The McGraw−Hill Companies, Inc. All rights reserved. Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without prior written permission of the publisher. This McGraw−Hill Primis text may include materials submitted to McGraw−Hill for publication by the instructor of this course. The instructor is solely responsible for the editorial content of such materials. 111 FINAGEN ISBN: 0−390−55313−1 Finance Contents Ross−Westerfield−Jaffe • Corporate Finance, Seventh Edition I. Overview 1 1 20 34 34 69 97 129 151 151 192 192 214 214 248 1. Introduction to Corporate Finance 2. Accounting Statements and Cash Flow II. Value and Capital Budgeting 4. Net Present Value 5. How to Value Bonds and Stocks 7. Net Present Value and Capital Budgeting...
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