DHA 8007 Week 2 Discussion – Capella University

A statement of cash flows, a balance sheet, and an income statement are some of the most important financial statements that are utilised to determine the financial health of an organisation. A profit and loss statement is an income statement, which summarises revenues, expenses and net income/loss within a certain period. The income statement is made up of operating revenues, operating expenses, and non-operating revenues and expenses, with the final result being the net income or loss (Ross, 2023). The balance sheet, on the other hand, shows the financial position of the organisation at a given time.

A balance sheet gives the knowledge of liquidity, solvency, and financial soundness of an organisation. A cash flow statement is used to trace the cash flows into and out of an organisation during a specific time. This statement assists in determining how an organisation produces and consumes cash, which provides a clearer view of an organisation in relation to its cash position in comparison to the other financial statements (Ross, 2023).

Current assets will include cash, accounts receivable, and inventory, and are supposed to be turned into cash in a year. Long-term assets such as property, plant, and intangible assets are investments that give value after several years (Ross, 2023). Short liabilities are debts that are to be settled within a year; such as accounts payable and short-term loans are classified as current liabilities, whereas long-term liabilities are debts that will be paid over a long period; they include bonds payable and long-term leases (Ross, 2023).

Strategic decision-makers take financial statements to understand the profitability, the financial stability and cash flow of healthcare administrators. These lessons assist administrators in resource allocation, investing in technology or services and making wise decisions regarding control of costs, growth opportunities and enhancing patient care without harming financial sustainability (Ross, 2023).