You Have Recently Been Hired As A Senior Financial Analyst

You Have Recently Been Hired As A Senior Financial Analyst By Blank Me

You have recently been hired as a Senior Financial Analyst by Blank Memorial Hospital, a for-profit organization. For your first assignment, the CFO asks you to prepare a Statement of Cash Flows in good form. Since you are a recent college graduate, he knows you are just starting out. He tells you (accurately) that the only resources you need to complete this task are the MH688 Lecture and Research Update on the Statement of Cash Flows and the textbook. He then gives you the following information.

Table 9: Blank Memorial Hospital Comparative Balance Sheet After preparing the Statement of Cash Flows, prove to the CFO that you have completed it correctly. (20 points) (A 1-page Statement of Cash Flows with proof is required.) Effective methods for cash flow analysis Sylvestre, Jeanne; Urbancic, Frank R Healthcare Financial Management; Jul 1994; 48, 7; ABI/INFORM Complete pg. 62

Paper For Above instruction

The task of preparing a Statement of Cash Flows for Blank Memorial Hospital, a for-profit healthcare organization, requires a comprehensive understanding of financial accounting principles and effective cash flow analysis techniques. As a newly recruited Senior Financial Analyst, the initial focus should be on accurately translating the comparative balance sheet into a well-formatted cash flow statement. This document will be structured into three main sections: operating activities, investing activities, and financing activities, each illustrating cash inflows and outflows based on the provided balance sheet data.

The first step involves analyzing the changes in asset, liability, and equity accounts from the beginning to the end of the period. These changes will indicate cash movements in different operational, investing, or financing activities. For instance, an increase in accounts receivable suggests cash reduction, whereas an increase in accounts payable indicates cash increase. After adjusting for non-cash transactions and accounting for depreciation and amortization, the cash flows from operating activities can be determined.

Next, cash flows from investing activities are derived from changes in long-term assets, such as property, equipment, or investments. Purchases of assets represent cash outflows, while sales generate inflows. The analysis of capital expenditures and asset disposals is critical to completing this section.

The third section involves financing activities, which reflect cash changes related to debt and equity financing. Increases in borrowed funds or issuance of stock lead to inflows, whereas repayments of debt and dividends paid are outflows. Proper classification of these items ensures clarity in the statement.

After constructing the three sections, the net change in cash is calculated and reconciled with the cash balance in the closing balance sheet to verify accuracy. To further validate the statement, a proof sheet should be prepared, illustrating each cash flow component and citing the specific balance sheet line items and adjustments used in calculations.

Applying effective cash flow analysis methods, as discussed by Sylvestre and Urbancic (1994), involves examining trends in cash flows over multiple periods, understanding the nature of cash flows in relation to operational efficiency, and assessing liquidity positions. Key indicators such as free cash flow, cash flow adequacy, and the cash flow to debt ratio provide insights into the organization's financial health. These analysis techniques support strategic decision-making and ensure that the cash flow statement accurately reflects the hospital’s cash position.

In conclusion, completing the Statement of Cash Flows for Blank Memorial Hospital involves meticulous classification of cash transactions, validation through a proof sheet, and applying cash flow analysis tools. This approach will not only fulfill the assignment requirements but also furnish valuable insights into the hospital’s liquidity and financial stability, aligning with best practices outlined in healthcare financial management literature.

References

• Sylvestre, Jeanne, and Urbancic, Frank R. (1994). "Effective methods for cash flow analysis." Healthcare Financial Management, 48(7), 62.
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