Question

The CEO of a 400-bed hospital has scheduled a board of directors meeting to discuss the current financial situation of the hospital and steps that need to be done to correct some current problems. The CFO needs to send each board member an explanation of the financial statements that they will be discussing. You are the Director of Finance and he has asked you to put together a memo, explaining each statement. Do the following:

• Provide a copy of the most common four statements used within your hospital and what information is available in each.
• Make sure you explain each main components/section of each statement.

NOTE: You can develop your own set of statements or research and pull healthcare financial statements online.

PLEASE USE DETAILS AND EXAMPLES THAT HAVE NOT BEEN USED BEFORE.

Answer 1

The 4 main statements used within a hospital are as follows:

1. Statement of profit or loss( also known as comprehensive income statement) - This will show the incomes earned by the hospital from the various sources and the various heads of expenditure of the hospital. The net amount gives the profit or loss of the hospital.
2. Statement of Financial Position( also known as Balance Sheet) - This shows the total assets and liabilities of the hospital on a particular date, generally tabulated as on the last date of the financial year.
3. Cash flow statement - This statement shows the actual cash position of the company. Here the cash expenses which are actually paid or earned are highlighted, irrespective the year in which itis accrued.
4. Statement of shareholders' equity - This statement shows the ownership statement of the firm, meaning the various stakeholders who have a share in the company's assets. This also shows what part of the company's capital is financed by equity and how much by debt.