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Instructions Assessment #1: Understanding an Income StatementTarget:
You are an intern in a healthcare organization’s business office. Use the Dehew Health System income statement in the attachment; please develop a 4-6 page paper responding to the following questions regarding the income statement: 1. What is an income statement used for? 2. What are the key components of an income statement? 3. On your example of an income statement, is the organization making a profit or loss? How much is that profit or loss? Show the calculations. (Total Revenues – Total Expenses = Net Profit/Loss) 4. On your example of an income statement, what is the “total contribution margin”? Show the calculations. (Net Sales – Total Variable Costs=Total Contribution Margin). Also, calculate the contribution per unit of service (UOS). If you are not using the sample financial statement, you can use the assumption that volume is 15,000 UOS if not included in financial statements. 5. What three financial indicators does a contribution margin help determine? How? 6. What is break-even analysis? What is the break-even point for this organization? List expenses assigned as variable and fixed. Show the calculations. (Net Patient Revenue – Variable Costs = Contribution Margin. Contribution margin/UOS = CM per UOS. Fixed Costs/CM per UOS = # of UOS to Breakeven). 7. How does a break-even analysis vary between fee-for-service and capitated payments? Explain it using the income statement you chose. What are the similarities and differences applicable to the Income statements in fee-for-service and capitated payment options? SOLUTION Assessment #1: Understanding an Income Statement Student Maryland University Global HMGT322: Healthcare Financial Management 9/3/2024 Income Statement According to Reiter and Song (2021), an income statement is also known as a profit and loss statement and is among the important financial statements as it showcases revenues, expenses, and the profit or loss made by the organization for a given financial period. It normally describes a definite fiscal quarter or year. An income statement is important to provide information on the financial performance of the organization to make decisions on whether it is profitable and healthy in its financial health to its users, such as management, investors, and creditors (Fridson & Alvarez, 2022). The income statement reveals the trends in revenue and expenses, operation efficiency, and future strategies in which stakeholders may decide on future expenditures. In the case of the Dewey Healthcare System or any other healthcare organization, the income statement is a key financial statement as it lets the management view the consequences of chosen economic activities and resource management strategies and influence them in the long term properly. Kindly click the purchase icon above to buy the full solution at $10 |
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