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Budget analysis assignment
Budget analysis assignment
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Capital In the operating budget, the organization prepares to include the costs of acquisition of items to assist in providing goods and services in more than one fiscal year. In the case of Denison, the organization considers a capital purchase of $500,000 in oncology equipment to better serve their patients. The purchase of the new equipment will be paid immediately, however, the equipment maintains a five-year life span and expected to be used evenly over that life time (Finkler et al., 2013). After the five-year life of the equipment, the value amounts to zero because the capital item charges as an expense on a straight-line depreciation—the cost of asset spread over the useful life (Hui, 2013). The following graph illustrates the depreciation expense of the oncology equipment purchased by Denison Hospital. Furthermore, the cash-flow demonstrates the monetary receipts and monetary expenses in a certain time period. The cash-flow budget greatly centers on viability, which relates to the organization’s generating enough cash to meet both short-term and long-term financial obligations to maintain their existence (Finkler et al., 2013). In essence, an organization generating more cash than using in their operations produces a more …show more content…
The average cost maintains the full cost of the objective divided by the number of units of provided service while the marginal cost refer to the additional cost incurred as a result of providing one more service unit (Finkler et al., 2013). The fixed cost refrains from changing based on changes in volume of service units while variable cost, on the opposite end, varies in cost based on changes in volume of service units (Finkler et al.,
In order to determine the value of operations, and using proforma income statement and balance sheet statement, Cash flow statement was formulated for the next 5 years. The Account Receivables plus the Inventory minus the Account Payable was determined as Net Operating Working Assets. An organization cost of 0,000 was amortized over the 5-year period.
General Practices Affiliates is considering an offer from Titus Lake Hospital to join under a provider leasing model. Under a provider leasing model, Titus Lake Hospital is purchasing General Practices Affiliates’ services. The practice will retain control of personnel, management, and practice policies. Titus Lake Hospital submitted financial reports to assure transparency during the lease agreement process. The following analysis will discuss whether Titus Lake hospital is a viable financial partner for General Practice Affiliates, possible implications of the lease, and recommendations.
Operating budgets are budgets that deal mainly with the day-to-day operations of a facility. This may include wages, utilities, rent, and items purchased that have the intent of lasting less than a year (Johnston, n.d). This type budget provides the needed information regarding the cash on hand needed to operate the facility during a fiscal year. Capital expenditure budgets deal with more long term items such as equipment or property. As stated by Johnston (n.d.), it is necessary to have a capital budget for continued growth of the business. You complete this task by purchasing assets that produce an income. Capital expenditure budget have the potential to cover a five- to ten-year period (Baker & Baker, 2014, p.174). Items included in the capital expenditure budget may also include loan interest and bondholder's interest. The operating budget and the capital expenditure budget interact with one another. To demonstrate an example: a healthcare facility purchases a chemistry analyzer for its clinical laboratory. The chemistry analyzer is placed in the capital expenditure budget, but the maintenance for the analyzer is placed in the operational budget. The capital expenditure expense is the chemistry analyzer, but the materials used to maintain the chemistry analyzer are operational expense.
John Hopkins Hospital was founded by John Hopkins a philanthropist and a Quaker by faith in 1867 and endowed in 1873. He dedicated his life and finances approximately $7,000,000 in cash to building a teaching hospital and a university named after him with designations of uniting functions of patient care with education and research. The John Hopkins hospital was officially opened on May 7, 1889. Before Mr. Hopkins died in 1973, he had committed himself to the principle of “united we stand and divided we fall” and selected board of trustees for the hospital and the university whom he entrusted with tasks and responsibilities to carry out his vision. On March 10, 1873, he put in black and white that the hospital must provide for “the indigent sick of the city of Baltimore without regard to sex, age, or color who may need surgical or medical treatment”. In his letter he also specified that the school of nursing and medicine must be established in conjunction with the hospital. Looking at it today, the John Hopkins hospital has evolved into one of the largest teaching hospital in the country. It includes more than 12 smaller hospitals and medical centers affiliated to the main hospital in Baltimore 226 clinical services 977 licensed beds and 37 building in the State of Maryland. The John Hopkins Hospital and School of Medicine are the founding institutions of modern American Medicine and the birthplace of so many traditions of medicine including ward rounds, residency programs, and house staff. Many medical specialties including neuroscience by Harvey, cardiac surgery by Blalock, urology, endocrinology pediatrics, and child psychiatry by Kanner were founded at this hospital....
Brigham and Women’s Hospital (BWH) is located in Boston, Massachusetts. This hospital is a major teaching hospital of Harvard Medical School. The Brigham and Women’s Hospital is a product of merge from three large teaching hospitals of Harvard Medical school. Those hospitals were: the Peter Bent Brigham Hospital, the Robert Breck Brigham Hospital, and the Boston Hospital for Women. Since 1980, after the merge, Brigham and Women’s hospital became the largest, the most innovative, and the most respectful hospital in the North-East USA. (Brigham and Women’s and Faulkner Hospitals, 2013)
That will also apply to Ex-ante analysis. The center will not be able to implement strategies and ideas for future movements in price or the future impact of a newly implemented policy. For example, if Bayview Surgery Center perform higher number of surgeries on the following year. The revenue generated from overcharging the insurance companies will also increase the profit. As a result, it will be hard to evaluate the implemented strategies since we won’t be able to interpret the revenue increase accurately.
After analyzing our most recent annual report from 2012. We noticed that our operational cost is approximately $20,000 over our revenue. Looking at our data from previous years, the $20,000 over-budget has occurred in the past. In 2010, Partners in Health had approximately $90,000 in unused funds which carry over at the end of ...
This is where the cash flow reaches its peak but also at the point of
These admission diagnoses lead to a large volume of unique supplies needed for the duration of the length of stay (LOS). The costs associated with ensuring supply availability and timely delivery can add even more expense. When a unit is able to create efficiencies to this process, substantial savings may be acquired.
Cash flow is calculated by subtracting total expenses from total income. If the resulting number is positive, the company is making a profit, and is considered to "be in the black."
Therefore, the amount of profit obtained is somewhat arbitrary. However, cash flow is an objective measure of cash and it is not subjected to a personal criterion. Net cash flow is the difference between cash inflows and cash outflows; that is, the cash received into the business and cash paid out of the business (Fernández, 2006). Whereas, net profit is the figure obtained after expenses or cost of resources used by the business is deducted from revenues generated from the business operations activities. Nonetheless, the figure for revenue and cash are not entirely cash, some of the items may be sold on credit and some of the expenses are not paid up
In life cycle costing, all sorts of cost will be list out, for instance, operating cost, production and implementation cost, maintenance cost and the cost or benefit of the ultimate disposal of the assets at the end of its life (Swaffield & McDonald, 2008). Besides, an overall framework which total incremental costs over the life span of a certain product is also taken into the account (Agarwal, R., n.d.).This helps management to better understand the difference between acquisition cost and operating cost which aids them in finding balance between investment costs and operating expenses (“Benefits of life cycle costing,” n.d.). For example, when one produce or sell a product, the first thing
Introduction:-Fixed assets like plant and machinery etc. are used for the purpose of production of goods or for providing useful services in the course of production. Value of such fixed assets decreases with the passage of time and its utilization i.e. wear and tear. Such decrease in the value of an asset is termed as depreciation. Depreciation has been defined as ‘the diminution in the utility or value of an asset, due to normal wear and tear, exhaustion of the subject-matter, effluxion of time accident, obsolescence or similar causes’. In other words, when an asset held by a business cannot be used as efficiently and effectively in future as it was used earlier, the loss caused to the business will be depreciation.
Today financial corporate managers are continually asking, “What will today’s investment look like for the future health of the company? Should financial decisions be put on hold until the markets become stronger? Is it more profitable to act now to better position the company’s market share?” These are all questions that could be clearly answered if the managers had a magical financial crystal ball. In lieu of the crystal ball, managers have a way of calculating the financial risks with some certainty to better predict positive financial investment outcomes through the discounted cash flow valuation (DCF). DCF valuation is a realistic approach, a tool used, to “determine the future and present value of investments with multiple cash flows” over a particular period of time which is incurred at the end of each period (Ross, Westerfield, & Jordan, 2011). Solutions Matrix defines DCF as a “cash flow summary adjusted so as to reflect the time value of money (The Meaning of Discounted Cash Flow, 2014).” The valuation of money paid or rec...
Solutions Matrix defines DCF as a “cash flow summary adjusted so as to reflect the time value of money (The Meaning of Discounted Cash Flow, 2014).” The valuation of money paid or received in the future has less monetary value if that same money was to be received or paid today (The Meaning of Discounted Cash Flow, 2014). This cash flow evaluation helps managers in their determination whether or not to invest in research and development, purchase more equipment, enlarge floor space, and increase laborers, or instead, retain net profits. Either way, the DCF valuation gives peace-of-mind in making the right financial decisions at the right time. The main intent of cash flow valuation is to give an estimation of return upon investment. If the initial investment is lower than its return, it is typically considered a wise