Financial Statements and Budgetary Considerations
Elizabeth Seton Pediatric Centre will have clear financial and budgetary considerations to increase accountability in asset management. The financial statement contains precise information about assets, liabilities, incomes and various expenses (Henderson, Peirson, Herbohn & Howieson, 2015). The ideal financial statement s also has shareholders' contributions, cash-flows, among other details. Elizabeth Seton Pediatric Centre's financial statement will meet the basic requirements of generally accepted accounting principles (GAAP).
Financial Statements
The appropriate financial statement for the Healthcare Elizabeth Seton Pediatric Centre is an elaborate income statement. With a detailed indication of the revenues, expenses and profit or losses within a period, the income statement will be a perfect pointer to the direction that the organization should take in coming up with strategies of increasing its performance alongside service delivery (Henderson, Peirson, Herbohn & Howieson, 2015). According to the international financial reporting standards, an income statement format can be single or multiple-statement with the comprehensive statement present in two different forms.
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Revenues. The income statement in Elizabeth Seton Pediatric Centre must indicate the earning from the services offered. The revenue can be from the selling of medicine and the hospital's pharmacy, doctor's fees, admission beds and nursing car charges. Specialized services such as X-rays and MRIs will also form part of the revenue accumulation. Children's nursery and playgrounds will also add revenue to the organization. The revenue section will also show the details of the date, patient and physician name, the number of drugs, among other information.
Expenses. The income statement will also show the various costs of operations. Utilities such as electricity and water, salaries for the subordinate and medical staff. The other expenses are the cost of drugs and government license fees, which are up for renewal. The income statement will show the prices based on their nature and functions.
Profit or Loss. The income statement will have provision for profit or losses. The calculation obtained after deducting expenses from the revenue will show whether the organization is making profit, losses or just breaking even.
Elizabeth Seton Pediatric Centre Income Statement |
|
|
Details |
Value is $ |
| Operating Revenue | |
| Net patient service revenue |
525000 |
| Other income |
110000 |
| Total operating Revenue |
635000 |
| Operating Expenses | |
| Salaries |
350,000 |
| Bad debts written off |
40000 |
| Depreciation |
8000 |
| other expenses |
95000 |
| Total Operating Expenses |
493,000 |
| Net Profit/Loss |
142,000 |
Proposal Impact
The proposal will have a definite impact on the income statement. The identified sets of opportunities in the project will create a chance within the income statement to develop an innovative way of generating revenue ( Jahmani et al., 2017) . The proposal impact will also impact on the financial statement by creating means of controlling expenses, therefore increasing the profitability. A solid proposal can also be used as a tool for borrowing financial support from banking institutions, thus making the project successful ( Adilli, 2020) . The impact of the plan on the income statement will allow the institutions to come up with strategies for asset acquisition and management through the outsourcing of some assets as well as hiring some.
Flexed Versus Fixed
Flexible budgets are created for different production levels, and as such, they vary with the activity level. Flexible budgets contain various budgets and apply in different conditions. On the other hand, fixed budgets apply in the production levels within a unitary set of circumstances ( Jahmani et al., 2017) . Using a fixed budget would see the Elizabeth Seton Pediatric Centre's proposal operate within the confines of hospital services and treatment of children. This means that the income statement would be limited and contains the revenues and expenses within the medical department. However, when applying a flexible budget in the proposal, the income statement would include taxes and costs from associated services such as child care centers and welfare areas ( Adilli, 2020) . The flexible budget would also vary with the season and the number of attendants at a time.
Proposal justification
Ratio Selection
The most appropriate ratio for the proposal is the return on investment (ROI). The ROI financial ratio measures the profit or loss generated concerning the amount of money invested. The ROI will vindicate the idea to spend or discard it entirely. A 15% ROI value means that the investment is viable, and the proposal should be approved for implementation ( Masters et al., 2017) . However, a lower ROI means some areas must be reassessed and corrected.
Ratio Results
The initial investment from savings and external funding will be about $350000. The initial investment will include the cost of building construction, purchase of facilities and staff hiring. The overall revenue at the end of the financial year is $635000. Thus the ROI will be calculated as below:
ROI= Current value of investment – Cost of investment
Cost of investment
ROI= 635000-350000 *100
635000
ROI= 44.88%
The high score of return on investment vindicates the decision to invest in this project. The project is viable with expected future profits and limited losses.
Short and Long-Term Impact
The proposal has a short and long-term impact on the organization. The short-term effect on the organization is the increment of customers and the spike in popularity. The increase in the number of patients will see an immediate need for resources such as nurses, doctors, attendants and resources. This will lead to a quick increment in costs ( Masters et al., 2017) . The long-term effect of the proposal going by the ROI and income statement is the increment in the revenue. With expanded hospital space, the income will increase alongside the costs. The 40% ROI calculation results paint a bright future for the organization, with positive returns on the invested resources.
References
Adilli, A. (2020). The Flexible Budget as a Development Tool: Evidence From the Personal Preparation Course. Available at SSRN 3539720 .
Henderson, S., Peirson, G., Herbohn, K., & Howieson, B. (2015). Issues in financial accounting . Pearson Higher Education AU.
Jahmani, Y., Choi, H. Y., Park, Y., & Jiayun Wu, G. (2017). The value relevance of other comprehensive income and its components. Revista Internacional Administracion & Finanzas , 9 (1), 1-11.
Masters, R., Anwar, E., Collins, B., Cookson, R., & Capewell, S. (2017). Return on investment of public health interventions: a systematic review. J Epidemiol Community Health , 71 (8), 827-834.
