Question

This week, your book discussed the importance of financial statements. For your post this week, I want you to discuss the importance of financial statements to managers, and to outside parties. Also, I would like you to explain the difference if the hospital is a for-profit, or not-for-profit organization.

• Write a minimum of 250 and a maximum of 300 words.

Answer 1

Financial statement are set of statements which will be providing details about the income statements along with the balance sheet and cash flows of the company so they will be important for various stakeholders of the organisation in order to provide information related to performance of the organisation in the short term and it will also provide a basis for estimation of the performance of the company in the future period as financial statements are basis for various analysis like ratio analysis & valuations approaches of the company.

Financial statements are used by the creditor in order to access the creditworthiness of the company and it play an important role in getting debt capital whereas equity shareholders are also accessing the financial statement of the company before investing into the company because financial statement will be providing them with appropriate information about the income generation of the company as well as the strength and weakness of the company through Assets and the liability segment which is present on the balance sheet and it will also provide basis for prospective investors to invest into the company.

The hospital is basically categorised under most profitable and not-for-profit entities but generally hospitals are categorised under profitable organisation in today's world because hospitals are providing with appropriate analysis of their financial because they want to manage their financials and maximize their chances of surviving under different economic conditions through maximization of the profit so I will categorise hospital under profitable organisation.