Business Finance - Accounting Week 7 Assignment- Healthcare Finance

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Week7AssignmentInstructions-HealthcareFinance.docx

Week 7 Assignment

Healthcare Finance

Developing Financial Statement

All organizations, including those in the healthcare industry, need to make money to be profitable and survive. Financial statements, such as balance sheets, profit and loss statements, and cash flow statements summarize an organization’s profitability and overall financial status. For this Assignment, you practice developing three key financial statements using data from a medical center.

To prepare for this Assignment: 

· Review the Week 7 Assignment document provided to you by the instructor in the  Announcements . Examine the data from the medical center described in the document. Reflect on how you will use this data to develop a balance sheet, profit and loss statement (statement of operations), and cash flow statement (statement of changes in net assets). Refer to the course text for additional guidance.

· Download the Week 7 Financial Statement Excel Template

Submit the following:

· Complete a balance sheet, profit and loss statement (statement of operations), and cash flow statement (statement of changes in net assets) using the “Week 7 Financial Statement Excel Template.”

Week7AssignmentLearningResources-HealthcareFinance.docx

Week 7 Learning Resources

Healthcare Finance

Required Readings

· Pink, G. H., & Song, P. H. (2020).  Gapinski’s understanding healthcare financial management (8th ed.). Health Administration Press.

· Chapter 13, “Financial Condition Analysis” (pp. 507–548)

· Crail, C., & Main, K. (2023, June 5).  Generally accepted accounting principles (GAAP) guide Links to an external site. . Forbes. https://www.forbes.com/advisor/business/generally-accepted-accounting-principles-gaap-guide/

· Meiryani, M., Soepriyanto, G., Wahyuningtias, D., & Dewi, K. (2020).  Accounting perspective in hospitalLinks to an external site. .  International Journal of Online & Biomedical Engineering,  16(8), 114–123. https://doi.org/10.3991/ijoe.v16i08.14721

· Stahl, M. J. (2006).  Financial statementsLinks to an external site. . In  Encyclopedia of Health Care Management. Sage. https://doi.org/10.4135/9781412950602

· Document:  Financial Statements (PDF) Download Financial Statements (PDF)

· Document:  Week 7 Financial Statement Excel Template (Excel spreadsheet)

Required Media

Walden University, LLC. (2024h). Financial reporting in healthcare [Video]. Walden University Canvas. https://waldenu.instructure.com

USW1_MMHA_6400_Week07_FinancialStatements.pdf

© 2022 Walden University, LLC Page 1 of 2

Financial Statements There are four basic financial statements. These statements, and any supplemental materials, are the final products of financial accounting. Their preparation follows prescribed rules and regulations, and you will notice many similarities in the actual statements when you look at them during this course.

Let’s take a close look at the four basic financial statements:

1. The income statement—This statement must be prepared first. It shows all the revenues earned, and the expenses incurred, during a specific period of time, such as a quarter or a year. The expenses are subtracted from the revenues to yield net income, which is often called “the bottom line” (as it used to be the last line on the income statement). Today, you often will see earnings per share information on the income statement following the net income. Other names for the income statement include statement of earnings, statement of operations, profit and loss statement, statement of revenue less expenses, and consolidated statement of income.

2. The statement of stockholders’ equity—This statement is prepared next, as it includes the net income calculated on the income statement. This statement reflects the changes that have taken place to the equity of the company over the same period of time as the income statement. This statement might also be called the statement of stockholders’ equity and retained earnings. If there are no changes in the shares of stock issued by the company, the statement might be called a statement of retained earnings. The retained earnings of a company represent the earnings that were not paid out as dividends. If the financial statements were prepared for an entity that includes more than one company or division, this statement would be called a consolidated statement of stockholders’ equity.

3. The balance sheet—This statement is prepared after the statement of stockholders’ equity, as it contains the equity position of the company. The name “balance sheet” was derived from the accounting equation “assets = liabilities + equity.” The equation must be in balance. All assets must equal the sum of all liabilities and equity. The statement gives a snapshot of the company on a specific date, such as December 31 of a particular year. Other names for the balance sheet are statement of financial position, consolidated balance sheet, or consolidated statement of financial position.

4. The cash flow statement—The last statement prepared is the cash flow statement. This statement uses information from all the other statements. Its purpose is to show the inflows and outflows of cash during the same time period as shown on the income statement and the statement of stockholders’ equity. It will reflect cash provided by the operations of the business, investment activities, and financing activities.

As mentioned above, the balance sheet is a reflection of the accounting equation: assets = liabilities + equity. Assets are those items that a company owns, such as cash,

© 2022 Walden University, LLC Page 2 of 2

accounts receivable, furniture and fixtures, and inventory. Liabilities show what a company owes to others, such as accounts payable, loans payable, and mortgages. The equity section contains information on the company’s stock as well as the earnings retained by the company.

USW1_MMHA_6400_Week07_financialStatementExcelTemplate.xlsx

Balance Sheet

Balance Sheet (in '000s)
For the Year Ended September 30, 2023
9/30/23
Current assets
Cash and cash equivalents
Net accounts receivable
Inventory
Total current assets
Gross plant, property, and equipment
(less accumulated depreciation)
Net plant, property & equipment
Long-term investments
Total assets $0
Current liabilities
Accounts payable
Wages payable
Total current liabilities
Long-term debt
Total liabilities
Net assets
Ending balance, unrestricted net assets
Ending balance, temporarily restricted net assets
Total net assets
Total liabilities and net assets $0

Profit and Loss Statement

Profit and Loss Statement
Statement of Operations (in '000s)
For the Year Ended September 30, 2023
9/30/23
Unrestricted revenues
Patient revenues (net of contractuals)
Provision for bad debt expense
Net patient revenues
Net assets released from temporary restriction
Total revenues
Operating expenses:
Labor expense
General expense
Supply expense
Depreciation expense
Interest expense
Total operating expenses
Excess of revenues over expenses
Transfer to parent corporation
Increase in unrestricted net assets $0

Cash Flow Statement

Cash Flow Statement
Statement of Changes in Net Assets (in '000s)
For the Year Ended September 30, 2023
9/30/23
Unrestricted net assets
Excess of revenues over expenses
Unrestricted contributions 0
Transfer to parent corporation
Change in unrestricted net assets 0
Temporarily restricted net assets
Net assets released from temporary restriction
Change in temporarily restricted net assets 0
Permanently restricted net assets
0
Change in permanently restricted net assets 0
Increase in net assets 0
Beginning balance, net assets
Ending balance, total net assets $0

WeekSevenAssignment2.docx

Healthcare Financial Management and Economics Week 7 Assignment – NorthWest Medical Center

Assignment: Developing Financial Statements

All organizations, including those in the healthcare industry, need to make money to be profitable and survive. Financial statements, such as balance sheets, profit and loss statements, and cash flow statements, summarize this profitability and an organization’s overall financial status. For this Assignment, you practice developing three key financial statements using data from the NorthWest Medical Center.

NorthWest Medical Center

North Medical Center is a large NorthWestern acute care and ambulatory facility serving an urban city population.

Givens (in '000s):

Insurance expense

$70,000

Cash

$20,000

Patient revenues (net of contractuals)

$614,000

Net accounts receivable

$25,000

Ending balance, temporarily restricted net assets

$8,700

Wages payable

$9,100

Prepaid expense

$1,100

Long-term debt

$189,700

Supply expense

$66,000

Gross plant, property, and equipment

$556,000

Net assets released from temporary restriction

$8,000

Depreciation expense

$10,000

General expense

$95,000

Transfer to parent corporation

($8,000)

Beginning balance, unrestricted net assets

$203,400

Accounts payable

$18,000

Beginning balance, temporarily restricted net assets

$16,700

Provision for bad debt expense

$5,400

Labor expense

$145,000

Accumulated depreciation

$99,000

Long-term investments

$148,400

Ending balance, unrestricted net assets

$426,000

To prepare for this Assignment:

Examine the data from NorthWest Medical Center. Reflect on how you will use this data to develop a Balance Sheet, Profit and Loss Statement, and Cash Flow Statement. Refer to the course text for additional guidance.

The Assignment:

Complete a Balance Sheet, Profit and Loss Statement (Statement of Operations), and Cash Flow Statement (Statement of Changes in Net Assets) using the Week 7 Financial Statement Excel Template located in the Learning Resources.

Your Assignment is due by Day 7 of Week 7.

Chapter07UHFM8thEdPPT-1.pptx
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