hcs380_v7_wk5_SA_business_proposal
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Summative Assessment:Business Proposal
University of Phoenix/Online
HCS/380
Theresa Pichelmeyer
November 22, 2021
Summative Assessment: Business Proposal
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Formerly known as Standford Hospital and Clinic was later renamed Standford Health Care (“SHC”). It operates as a licensed acute care hospital and cancer center, which includes several outpatient physician clinics, community settings, in association with other regional hospitals within the San Francisco Bay Area of California. SHC is known as a teaching hospital that provides health to adults in areas of cardiac care, cancer treatments, solid organ transplantations, neurosciences, and orthopedics designated by management as “ Strategic Clinical Services”
(Coopers, 2016). The organization’s mission is to focus on healing humanity through science and compassion, one patient at a time ( Coopers, 2016). Stanford Health Care financial has hired me to conduct a review of the latest consolidated financial statement. I will review the operational structure, financial analysis and stability, vertical and horizontal analysis, and financial ratios. Based on my findings, I will make recommendations to leadership. This business proposal will help the organization, which includes all staff and management, to become more profitable while delivering quality of care. Operational Structure The Board of Trustees of Leland Stanford Junior University and University HealthCare Alliance ("UHA") are sole corporate members of SHC and LPCH, which help specialize in funding along with other affiliations. (Coopers, 2016)The Stanford University School of Medicine ('SoM") and the SHC are members of the UHA and appoint directors to the governing board (Coopers, 2016). SHC, UHA, SHC-VC, and SHC Advantage is not-for-profit corporation and is tax-exempt. Along with Lucile Salter Packard Children's Hospital (LPCH), the corporation's purpose is to operate the clinical parts with the medical students, training residents and other teachable entities to perform medical and biological science research.
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Financial Analysis and Stability The purpose of financial analysis is to see how the organization is functioning financially as a whole. The steps required to perform a financial analysis include reviewing the balance sheet, operations and net assets statement, and cash flow statement. The information about the organization's current financial assessment concludes that as of August 31, 2016, and 2015, the results of their operations and changes in net assets and their cash flows for the years then ended following accounting principles accepted in the United States of America (Coopers, 2016). SHC engages in several community benefit programs and services they are compensated for that are excluded from statements. However, the changes occur when they are not compensated due to vulnerable populations being charity care recipients.
Vertical and Horizontal Analysis My findings regarding the comparison between the vertical analysis and horizontal analysis are interesting. According to the balance sheet, the financial stats in every sheet increased in 2016 compared to 2015. For example, when doing a vertical analysis, the total amount of assets in 2016 versus 2015 increased by $239,458, equivalent to 4.3% (Coopers, 2016). For example, when doing a horizontal analysis, it is computing changes since the base period. The formula is current year amount minus base year amount divided by base year amount. (Kimmel,2019). It would increase or decrease with hopes of finding trends. Based on the information provided, the best analysis for this business proposal would be the vertical analysis.
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Financial Ratios
The objective of utilizing financial ratios is to analyze an organization’s performance to make some decisions (Kimmel,2019). In this review, I decided to do a current ratio. A current ratio expresses the relationship of current assets to current liabilities, computed by dividing current assets by current liabilities (Kimmel,2019). The example below provided means that it has $1.62 of current assets for every dollar of current liabilities and is based on its current ratio, which increased in 2016. The debt to asset ratio measures the percentage of total financing given by creditors. It is calculated by dividing total liabilities (both current and long-term debt) by total assets. The ratio indicates the degree of financial leveraging (Kimmel,2019). The example provided below means that the creditors have provided financing sufficient to cover 47% of the company’s total assets in 2016 and 45% in 2015. Basically, in 2016, it would have to liquidate 47% of its assets at its book value to pay off the total debt. Example of Current Ratio:Current Assets
÷
Current Liabilities Year 2016
Year 2015
$1,533,270 ÷ $942,258=1.62
$ 1,281,923 ÷ $814,385=1.57
Example of Debt to Asset Ratio:Total Liabilities ÷
Total Assets
Year 2016
Year 2015
$2,703,187÷ $5,757,337= 47%
$2,458,171÷ $5,517,879=45%
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Recommendation(s) to Leadership
One financial strategy to leadership that I recommend based on the organization's financial statements is to conduct a vertical analysis on a month-to-month basis instead of yearly.
My reason is that there has been a significant increase in all sections of each financial statement between the years 2015 and 2016. If possible, try to conduct a horizontal analysis to find trends to help the debt to asset ratio go down. I am aware that this corporation has grown immensely within a year, which is why the small increase. However, the goal is to keep the numbers at a certain level. Conclusion
Lastly, Standford Health Care (SHC) seems to be on board and growing more as a corporation. Please remember that Standford Health Care's (SHC) mission focuses on healing humanity through science and compassion, one patient at a time. The bigger the corporation, the higher the risk, as you can see how the organizational structure expanded and all of financial statements numbers increased in every category. The vertical financial analysis was best to use, and it provided the percentage of increase with a year time frame. It is a good way to track the finances every year. Horizontal analysis should be implemented more to help find trends since this corporation is so huge. I encourage using financial ratios as a way to analyze the organization's performance as a whole. The new mission now is to be more profitable while delivering quality care.
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References
Coopers, Pricewaterhouse (2016).
Stanford Health System.
file:///C:/Users/Owner/Downloads/shc-consol-fy-2014-audited-fs%20(3).pdf
Gallo,Amy (2015, September ). A Refresher on Current Ratio..
Harvard Business Review Digital
Articles,
(), p2-5.
http://www.hbr.org
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2019).
Accounting: Tools for business decision making (7th ed.). Wiley.
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