Project Guidelines
Introduction:
This
project has been designed to allow students to learn how to analyze the
financial condition of a nonprofit hospital by conducting a financial condition
analysis. To evaluate your understanding of the use financial statements in
decision-making, you are asked to research and analyze a nonprofit hospital.
Try to think of your analysis as a form of storytelling. You are going to tell
the story of what your hospital has been doing for the past five years and
where you think it will be going in the future.
Financial
condition analysis focuses on providing a framework for using financial data in
a variety of business analysis and valuation contexts. The effective analysis
of a set of financial statements requires an understanding of the economic
characteristics and current conditions of the healthcare industry, the strategy
the hospital selects to employ to successfully compete, and the accounting
principles and procedures underlying the hospital’s financial statements.
Before
you begin to create your written outline and undertake the analysis of your
hospital’s financial statements, you will need to compile the relevant
information. The lists presented in this document are intended to serve as
guides to help you accumulate useful information and to organize that
information effectively. Not every item listed will be relevant to your hospital. Further, based on
your outside resources, you may wish to include additional facts or opinions
not covered in the document. Be sure to cite any outside resources used were
necessary.
Remember
that your audience are creditors who what to know whether they should lend your
organization money. While gathering information for this project, you should
perform an ethical audit of the hospital examining any ethical issues resulting
from the nature of the hospital’s services, policies, operations, governance
structure, or competitive environment.
Materials:
You
will be assigned a hospital and provided an Excel file with five years of
financial statement data (i.e., balance sheet, income statement, and statement
of cash flows). Templates are provided for areas to complete the analysis.
Required
Submissions: Each
student will submit a portfolio containing the following items: (1) the EXCEL
spreadsheet containing the hospital’s financial statements, common-size and
trend analysis, and financial ratio computations using cell formulas and (2) a
WORD document addressing the required elements/analysis.
Format:
The
report should be well written, highlighting significant information. References
must be appropriately cited using APA style. Double-spaced, one-inch margins,
12-point Times New Roman font.
Include a title page that follows
APA format
Part
I: Tell me about your Organization
This
part of the analysis will focus on your hospital’s background information. The
purpose is to use a variety of resources to research your organization and to
then prepare a well-written summary describing the hospital that is two to five
pages long.
Requirements:
Research
and then describe your organization’s primary business activities. Also include
a brief historical summary, mission statement (this will be a direct quote),
charity care and financial assistance policies, primary service area, recent
developments within the organization, future direction, the socio-economic,
demographic, and healthcare needs of the community your facility serves, recent
developments and other items of significance to your organization.
Include
information from a variety of resources.
- Explore
the organization’s website. An organization’s website usually provides updated,
comprehensive information including links to current news items and community
health information. Note that the hospital is the one posting the information
to it’s website, and therefore, the information may be biased in favor of the
organization.
- Select
at least two significant news items (not obtained from the organization’s
website) related to your organization from recent business
periodicals/newspapers. These can generally be found from an internet search.
- To
maintain tax-exempt status a hospital must perform a community health needs
assessment and make it available on their website. This assessment provides a
great overview of the background of the community served and the environment in
which the organization operates.
- The
respective State Department of Health can be a source of information as well.
Part II: Conduct a Financial
Analysis
This part of the assignment will focus on
the financial condition of your hospital. Using the Excel file provided you
will prepare trend analyses and common-size statements, classify cash flow
patterns, compute ratios, and prepare a well-written analysis summarizing the
key finding (i.e., significant amounts, trends, and relationships) identified
of your analysis that is two to five pages long.
The following is necessary
to complete your analysis:
- Prepare
common-size statements for the Balance Sheet and Income Statement
- Prepare
trend analyses (horizonal analysis) for the Balance Sheet and Income Statement using
2012
as your base year
- Classify
the cash flow pattern for the Statement of Cash Flows
- Calculate
the ratios listed on the Ratio Analysis worksheet for the five years of
information.
There are ratios beyond what as covered in
class and you will need to perform some outside
research to
understand how to interpret these ratios. Use Excel formulas and Cell
References1 for all!!
Part III: Would You Advise a
Creditor to Lend to This Organization?
Prove a
recommendation that is at least two pages based on your research, analysis, and
sound reasoning that answers the above question. Identify 3-5 significant
points that justify your conclusion. Support your points with a comprehensive
explanation incorporating sound reasoning.
Part
I: Organization Overview
Primary
business activity
Historical
summary
Mission
Statement
Charity
care and financial assistance policies
Primary
service area
Socio-economic,
demographic, and healthcare needs of the community Recent development and other
significant information
2-5 page summary
Part
II: Financial Analysis
Balance
Sheet,
Trend analysis, Common-size statements
Income
Statement,
Trend analysis, Common-size statements
Statement
of Cash Flows,
Pattern analysis
Ratio
computation
2-5
page analysis
Part
III: Recommendation
Conclusion
supported by sound reasoning
Comprehensive
At
least 2 pages
Other
Minimum
6 pages, not including attachments
Good
writing style, good grammar
Effective
use of Excel formulas and Cell References
12-point,
Times New Roman font, double-spaced, 1” margins
Well-organized,
professional, and creative
Effective
use of graphs and charts
APA
style and references
1 Cell Reference
A
cell reference refers to a cell or a range of cells on a worksheet and can be
used in a formula so that
Excel
can find the values or data that you want that formula to calculate. In one or
several formulas, you can use a cell reference to refer to:
- Data
from one or more contiguous cells on the worksheet.
- Data
contained in different areas of a worksheet.
- Data
on other worksheets in the same workbook.
As we move
through the course two of the more common cell references we will use are:
This formula: Refers to:
|
And Returns:
|
=C2 Cell C2
|
The value in cell C2.
|
=Sheet2!B2 Cell B2 on Sheet2
|
The value in cell B2 on Sheet2.
|
In
the first example you place your cursor in the “destination” cell (i.e., the
cell you want the result to be located), enter an equal sign (=), click on the
cell your want to carry information over from, and then hit enter.
In
the second example you are doing the exact same, with the exception of
accessing a number from a different sheet in your Excel file.
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