Module 2, Financial and Strategic Planning (SLP) - Essay Example

Health sciences and medicine Trinity hospital balance sheet as of December 31, ASSETS Current assets Cashin bank2360000Revenue 1500000Delayed payments 0Grants 0Total current assets 3860000Fixed assets Equipment and fixtures (less Depreciation)1000000Total fixed assets1000000Total assets 4860000Liabilities Current liabilities Operating expenses1000000Debt retirement150000Retirement plan150000Malpractice costs150000Total current liabilities1450000Long- term liabilities Long- term Debt900000Total liabilities Net worth (total equity)2410000Total liability and net worth4760000Trinity hospital balance sheet as December 31, 2011ASSETS2011Current assetsCash in bank1445000Revenue 1300000Delayed payments 500000Grants 250000Total current assets 3495000Fixed assets Equipment and fixtures (less Depreciation)1000000Total fixed assets1000000Total assets 4495000Liabilities Current liabilities Operating expenses1200000Debt retirement150000Retirement plan150000Malpractice costs150000Total current liabilities1650000Long- term liabilities Long- term Debt750000Total liabilities Net worth (total equity)2000000Total liability and net worth2750000Composed balance sheets in a tableASSETS2010 2011Current assetsCash in bank23600001445000Revenue 15000001300000Delayed payments 0500000Grants 0250000Total current assets 38600003495000Fixed assets Equipment and fixtures (less Depreciation)10000001000000Total fixed assets10000001000000Total assets 48600004495000Liabilities Current liabilities Operating expenses10000001200000Debt retirement150000150000Retirement plan150000150000Malpractice costs150000150000Total current liabilities14500001650000Long- term liabilities Long- term Debt900000750000Total liabilities Net worth (total equity)24100002000000Total liability and net worth47600002750000Current ratio = For 2010 Current ratio is 3860000/1450000 = 2.

66For 2011Current ratio = 3495000/1650000 =2.11 Working capital = current assets - current liabilitiesFor 20103860000 – 1450000 =$ 2410000Working capital for 20113495000 – 1650000 = $1845000Leverage (or Debt/Worth Ratio)Debt /net worthFor 2010900000/2410000 = 0.373Leverage for 2011750000/2000000 = 0.375Financial trendsCurrent ratio: is the measure the ability of an organization to pay its exclusive current obligations using the current assets. Trinity hospital’s ability to pay its obligations reduced from 2.

66 in 2010 to 2.11 in 2011. This shows a reduction of 0.55 in the payment of its obligations. Working capital: is a vital measure of hospital’s efficiency and its short-term financial health. The working capital reduced over the year for (2410000 -1845000) $565000. This shows a tremendous decline of efficiency in the hospital and a further reduction its short-term financial health. Efficiency of the hospital should be enhanced to improve its financial health. Financial leverage: shows the extent to which the hospital is using the money borrowed.

The extent increased from 0.373 in 2010 to 0.375 in 2011. This shows the increase in the risk of bankruptcy. The hospital should make a decision of generating internal funds to finance it operations. This will curb the financial risk that hospital faces when it uses the borrowed debt.ReferencesLee, C. F. (2000). Advances in financial planning and forecasting (3rd ed.). Amsterdam: JAI. Sattler, M. (2011). Excellence in innovation management: A meta-analytic review on the predictors of innovation performance (2nd ed.). Wiesbaden: Gabler.

Vause, B. (2009). Guide to analysing companies (1st ed.). New York: Bloomberg Press.