Every organization, whether big or small, requires finances to facilitate its operation and achieve its target objective. The future of the business relies on finances today. Thus, finances have become the lifeblood of the business. Without it, organizations will not achieve their target. They provide an analysis of how the enterprise has performed in the previous financial year and hence, indicate its current position. Effective analysis requires establishing a good relationship between different components of the financial statement, which will help the management to make the relevant decision based on the information contained in the financial statements. The financial analysis aims to evaluate financial statement information to judge the profitability and financial capabilities of the business.
Evaluation of Income Statement
Analyzing the financial statement of Good Samaritan Medical Centre, there significant changes that have occurred between 2015 and 2016. For instance, examining the business income statement, there is a substantial decline in net income from 8,206 in 2015 to 7,860 in 2016. The decline is attributable to certain factors, such as an increase in salaries and benefits in 2016. An increase in salaries and wages is attributable to various factors such as pay rise or hiring additional staff in the company leading to an increase in expenses (Holdren, 2015) . However, there is an increase in overall net operating revenues in 2016 to 169,979 from 140,924, which can be attributed to the additional staff that the company has employed and therefore it has led to an increase the number of patients served per day.
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Evaluation of Balance Sheet
Examining the company balance sheet, there is a significant increase in total assets from 121,101 in 2015 to 160,815 in 2016. The change is a result of an increase in cash and cash equivalents, increase in short term investments, long term investments as well as net property and equipment. These assets represent the equity of the company, and hence, their increase results in a direct increase in company equity. However, the company has experienced an increase in total liabilities from 68,893 in 2015 to 100, 747 in 2016. The increase relates to the increase in notes payable, accrued expenses and long-term debt. The loan increases the company cash flow meaning that it can be able to cover most of the operational costs (Holdren, 2015) . An increase in notes payable is as a result of an increase in inventory.
Recommendation of Future Financial Stability
The management dream is to have the company achieve financial stability in the future. However, nothing is certain in the future, but the company should explore the various option that can help increase future performances. One essential factor for the company is lowering its debt. The company should lower the amount of debt at a manageable level (Berndsen, León & Renneboog, 2018) . That way, it will be able to eliminate high interest associated with the debt. It is also essential for the business to increase its net worth by paying off the loans attached to assets so that it can own more of the equity. The company should also try to explore ways to diversify their income (Berndsen, León & Renneboog, 2018) . For example, they can invest in stocks and bonds, which will have future returns to the company. Having multiple sources of income is a sure way of achieving financial stability for the company.
References
Berndsen, R., León, C., & Renneboog, L. (2018). Financial stability in networks of financial institutions and market infrastructures. Journal of Financial Stability , 35 (3), 120-135. doi: 10.1016/j.jfs.2016.12.007
Holdren, G. (2015). Toward Greater Comparability of Financial Statements. Financial Analysts Journal , 19 (2), 101-104.
