Ratio Analysis : Financial Analysis Essay

Ratio Analysis : Financial Analysis Essay

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The Financial condition analysis is of vital concern to health managers, security analyst,
investors and lenders. There are various financial terms which help in providing financial information of an organization. By looking at the raw data merely it is difficult to make any judgement from the income statement and balance sheet. “Ratio analysis is a form of financial statement analysis that is used to get a quick sign of a firm’s financial performance in several key areas. Ratio analysis is a cornerstone of fundamental analysis. Ratio analysis provides information about company’s financial information, whether it is in loss or profit.
“Shareholders’ equity is equal to a firm’s total assets minus its total liabilities”. (Investopedia)


Literature Summary and Review
When academicians were trying to prove that ratio analysis was no longer an effective tool for financial analysis, at that time the most appropriate studies available on this subject were given by Altman.E.I. a financial economist at New York University. The model was formulated which helped in determining the bankruptcy of companies. This model uses five financial ways to produce a single number, number is called Z=score is a general measure of corporate financial health. With its regulations and guidelines for ethical, transparent compliance, e.g., financial statements, the establishment of internal controls and for the ethical handling of actual or apparent conflicts of interest, full disclosure in the financial reports, and compliance with government rules and regulations, and the disclosure thereof, and as important as they are the health care industry.
Therefore, it is a healthcare organization liability to create transparent financial documents, that should...


... middle of paper ...


...enge that health care is facing is of revenue cycle management and increasing cost of the staff and supplies.
Nowadays there are constant changes of in regulatory and reimbursement, because which is a great concern among health care companies. Companies have strong understanding of their financial position they can easily manage to a changing market. Financial ratio has the ability to convert company’s financial information in a standardized format, which help the companies to compare themselves and identify their personal strength and weaknesses. A user can judge a company by just looking at few numbers instead of reading the whole financial statements.
Shareholders’ equity helps analysts to analyze the financial health of a company. It proves that firm is dividend paying firm if it has paid dividend for two years or more than two years














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