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Summary MHA 5001 Unit III Scholarly Activity Vu Minh Duy.docx MHA5001 The Baldwin General Hospital Columbia Southern University MHA5001 Health Care Financial Management Introduction Financial statement analysis provides basis for any judgements a
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MHA 5001 Unit III Scholarly Activity Vu Minh D MHA5001 The Baldwin General Hospital Columbia Southern University MHA5001 Health Care Financial Management Introduction Financial statement analysis provides basis for any judgements about financial condition and plan for future (Luis ...
mha 5001 unit iii scholarly activity vu minh duydocx mha5001 the baldwin general hospital columbia southern university mha5001 health care financial management introduction financial
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MHA5001
The Baldwin General Hospital
Columbia Southern University
MHA5001 Health Care Financial Management
Introduction
Financial statement analysis provides basis for any judgements about financial condition
and plan for future (Luis & Kristin, 2016). Operating indicator analysis, on the other hand, digs
deeper and is more laser-focused on business efficiency, providing explanation to the
organization’s financial condition. Besides understanding internal situation, managers also need
information about how efficient their organizations are in comparison with competitors. This
paper discuss an empirical example using the DuPont analysis for evaluating business efficiency
between two healthcare facilities.
The DuPont Analysis of Baldwin General Hospital
The DuPont analysis is a useful technique to analyze a firm’s profitability through
traditional efficiency measurement tools. Using this technique, analysts can determine which
factors are associated with the firm’s business performance. Methodologically, it integrates
various factors in the balance sheet and income statement as presented in an equation below:
ROE = net profit margin * total asset turnover * equity multiplier
Baldwin General ROE = (1,,613) * (28,,869) * (9,,118)
= 4.3 % * 2.9 * 4.7
Creek Park ROE = 3.8% * 2.1 * 3.2
Before making a financial comparison of two hospitals, let’s start with the interpretation
of three components forming the DuPont equation. Net profit margin measures how much net
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