Healthcare ratios/fiance DQ question - Coursework Example

Financial ratios in health care discussion question Financial analysis is an essential constituent in managing the nursing and hospitality industry. A financial ratio is a comparative value of two designated figures taken from a health organization’s financial records with an objective of assessing the organization’s performance and/or financial position of the organization and its overall ability to offer competitive services. It helps an organization to determine its efficiency, establish possibility of financial distress, and solvency (Finkler & Jones, 2012).

Unlike the nurse-to-patient ratios common in the nursing industry, financial ratios assesses expenses, assets, cost-effectiveness, and other imperative financial aspects. They can be articulated as percentages or decimals. The distinctiveness (focuses on service endowment) of the nursing and hospitality environment requires that management regularly conduct ratio analysis to keep track of performance and new developments (Finkler & Jones, 2012). In the nursing and hospitality industry, ratios are used for benchmarking, trend analysis, and establishing the industrial average.

An organization’s current performance is compared with its past and/or anticipated performance and isolates any eccentricities. An organization’s performance can also be compared with that of other organizations in the nursing industry. Ratios are also used in paralleling the performance of an organization in the nursing industry with that of another organization in a dissimilar sector. When making comparisons, most organizations use a year as the foundation. Using a year as the base allows an organization to conduct solid evaluations since most of the financial statements are prepared yearly and it will also be tranquil to find the end-year-records from other organizations of interest.

However, making comparison over short epochs such as trimestral allows an organization to quickly identify vacillations and/or paucities and take counteractive action (Finkler & Jones, 2012). No standard time that all organizations must adhere to since time selected should be tailored to the specific needs and/or conditions of the organization. However, an organization should endorse constancy on the time used, and that time must tally with that of other organizations within the industry for ease of comparability.

ReferencesFinkler, S., & Jones, C. (2012). Financial Management for Nurse Managers and Executives - Pageburst E-book on Kno Retail Access Card. W B Saunders Co.