chapter  7
24 Pages

Managing financially

WithChristopher J Cowton

Accounting systems have been needed to help ensure that the right sums of money are available and spent in accordance with proper authority. Quite reasonably, health care organizations have been required to act as good stewards of the large sums of money entrusted to them, and to account for that stewardship. The most important requirement for interpreting financial statements is to understand what the basic figures mean. The process of analysing financial statements, using both standard and customized ratios, is as much about raising questions as providing answers. An unusual change in a ratio might indicate a number of things, which examination of other ratios might help to clarify. Interpreting financial statements is thus more a creative process than a mechanical one. The financial data and analysis have to be related to how the entity to which they refer actually works.