Summary
The selected article for review is by Lazzari Zach, which was published in 2018 in the AZCentral website. The article primarily highlights the importance of financial ratios within healthcare organizations and the industry in general. In the article, financial ratios are presented as crucial metrics for healthcare entities. Indeed, such ratios show where operating costs are moving, therefore, making it easy to manage cash flows and further providing a platform for profitability analysis. Thus, the article’s major points are based on financial statements including cash flow and its management as well as debt, operational, and margin ratios.
In essence, excellent cash flow and its management are crucial to operational success within the healthcare industry. In addition, the aspects above help meet monthly payments while fulfilling overhead and operational costs. Regarding debt ratios, the author stipulates that analyzing debt-to-capitalization ratios demonstrates the strength and long-term worth of a healthcare entity. To this end, the debt ratio is fundamental to investors and in risk analysis. Lazzari (2018) further notes that keeping a comprehensive track of operational costs helps healthcare organizations to accommodate and model treatments and procedural variables such as bed fees, treatments, and basic services despite their unpredictable nature. Under margin ratios, the author contends that managing financial statements such as cash flow is essential, but the ultimate end game for profitability is ascertaining and examining margin ratios. In effect, determining profitability will subsequently determine survival, growth, and total market share of a healthcare organization.
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Useful Aspects
The most important aspect of the article is the fact that all the financial ratios and statements are concisely discussed. Indeed, how these ratios are employed and their significance in the healthcare organizations and industry are well illustrated. Besides, the author describes the benefits of using each of the aspects discussed thereby acquainting the reader with the fundamental knowledge and insight regarding the same. In essence, what is useful is that all the financial concepts mentioned in the article have been fully explained under different sections, which demonstrate the coherence and organization of the discussion.
Reference
Lazzari, Z. (2018). What is the importance of financial ratios in health care organizations? AZCentral. Retrieved from https://yourbusiness.azcentral.com/importance-financial-ratios-health-care-organizations-27142.html#
