Identify actions the organizations management team can take

Assignment Help Other Subject

Reference no: EM131367396

Healthcare Finance

Part I

Describe the following 4 types of costs:

• Fixed
• Variable
• Semivariable
• Semifixed

Part II

Dynamic Medical Suppliers, Inc. has sales of $300,000 for the calendar year of 2010. Its total variable costs equal $107,700.

Calculate the contribution margin ratio, and determine whether it presents profit or loss to the organization.

	Total	% of Revenue
Sales (Revenue)	$300,000.00	100%
Less variable costs		36%
Costs of medical supplies sold	$65,825.00
Commission	$26,875.00
Delivery fees	$15,000.00
Total variable costs	$107,700.00
Contribution margin	X	X
Less fixed costs	$115,000.00
Operating income	$77,300.00

Part III

Determine the number of full-time employees needed to cover multiple shifts based on information provided within the following scenario:

Health care is a critical field, and some agencies require that staff members be present at all times to ensure that there is adequate staff to care for the patients. For example, a medical center that has both inpatient and outpatient units will require staff be present after normal business hours to provide care to those admitted to the inpatient unit. It is also important to ensure that there is sufficient staff to provide care to the number of patients being treated. This is imperative to managers when it comes to determining costs associated with salary and benefits. If an organization is overscheduling staff, it could have a severe impact on the revenue because the staff-to-patient ratio would not be appropriate.

You create the schedule for the nursing staff in the pediatric intensive-care unit. Your daily staffing uses 6 registered nurses (RNs) working 8 hours and 2 licensed practical nurses (LPNs) working 3 hours. Determine the number of work hours required for 1 day.

Part IV

Understanding financial ratios can help the health care organization analyze its credit. Financial ratios should be compared to other financial information within the organization. Values used in calculating financial ratios are taken from the balance sheet, income statement, and statement of cash flows.

The following are types of ratios:

• Liquidity ratios tell whether the health care agency is able to meet its financial obligations.

o Are there assets or cash available to pay the bills?

• Solvency ratios tell whether the organization has the means to meet its long-term obligations.

o How solvent is the agency?

• Profitability ratios tell whether the operating revenue outweighs the operating expense.

o How well does the medical center use its assets and control its expenses?

Compute ratios using the provided data/information below.

Use the financial reports below to compute the requested financial ratios. Provide a brief statement (1-2 sentences) explaining the outcome of the ratio.

Dominion Plus Surgery Center Balance Sheet December 31, 200XX
Assets
Current assets
Cash and cash equivalents	$225,000.00
Accounts receivable (net)	$450,000.00
Inventories	$50,000.00
Prepaid insurance	$18,500.00
Total current assets		$743,500.00
Property, plant, and equipment
Land	$85,000.00
Buildings (net)	$2,500.00
Equipment (net)	$215,000.00
Net property, plant, and equipment		$302,500.00
Other assets
Investments	$75,000.00
Total other assets		$75,000.00
Total assets		$1,121,000.00
Liabilities
Current liabilities	$300,000.00
Total current liabilities		$300,000.00
Long-term debt	$145,000.00
Total liabilities		$445,000.00
Fund balances
Unrestricted	$295,000.00
Restricted	$ 0.00
Total fund balance		$295,000.00
Total liabilities and fund balance		$740,000.00

Dominion Plus Surgery Center Statement of Revenue and Expenses Year Ending 12/31/20XX
Revenue
Net patient service revenue	$2,555,874.00
Total operating revenue		$2,555,874.00
Operating expenses
Surgical services	$713,850.00
Post-op services	$300,000.00
Depreciation	$100,000.00
Interest	$63,000.00
Total operating expenses		$1,176,850.00
Income from operations		$115,000.00
Losses (nonoperating)
Interest income	$7,700.00
Gains (nonoperating)		$7,700.00
Revenue and gains in excess of expenses and losses		$122,700.00
Increase in unrestricted fund balance		$122,700.00

Part V

• Using the information provided in Part II, determine the break-even point for the organization.

• Dynamic Medical Suppliers, Inc. has sales of $375,000 for the calendar year of 2010. Its total variable costs equal $63,730.

Part VI

• Using information provided in Parts II and V, identify actions the organization's management team can take to assist the organization in reaching its break-even point.

The organization can work hard to ensure that there is more revenue coming in than there are expenses going out. This was there as a gain versus a loss. It is management's duty to stay abreast of the current sales through monitoring and reporting. If a decline is observed throughout the year, management should discuss changes that must occur to increase sales and not experience any loss with leadership and the staff.

Reference no: EM131367396

Questions Cloud

Capital budgeting and investment-cash budgeting : Let's talk about how important the revenue cycle is to the activities we've learned about this week - capital budgeting and investment, cash budgeting, etc. Considering the importance of hospitals, and particularly non-profit hospitals, to a communit..

Critical success factors for evaluating the success : Referencing Kotter (2007) on "critical success factors" for evaluating the success or otherwise of a change situation and the work of P.Atkinson who looked at factors of "resistance to change" andswer the following question "consider one way the work..

Very upset and concerned about continuing : The physicians for the patient are very upset and concerned about continuing to provide care that they believe is futile. The patient is developing a serious pneumonia, and the mother wants it treated aggressively. The physicians are reluctant. An..

How channel can provide marketer with contact efficiency : Explain how a channel can provide a marketer with contact efficiency. How can a firm benefit from participating in a horizontal marketing system?

Identify actions the organizations management team can take : healthcare finance_u2ip- Using information provided in Parts II and V, identify actions the organization's management team can take to assist the organization in reaching its break-even point.

Developed understandings of structural dilemmas : Post a narrative sharing the understandings you developed about similarities and dissimilarities at Toyota and General Motors. Make sure your reader understands how you developed understandings of structural dilemmas and how these can vary in expr..

Organizations corporate governance policies : Compare and contrast three organizations corporate governance policies, codes of ethics or diversity policies for an organization. You will be using one of the two Compare/Contrast graphic organizers provided to analyze your findings.

Move to shift production offshore from high-cost locations : For decades, General Electric has been at the forefront of the move to shift production offshore from high-cost locations inside the United States to cheaper locations, such as China. But there are now some signs that the relentless flow of productio..

User Account

All Pages