Introduction
Financial analysis has to be done by Vila health’s financial analyst to evaluate the projects, budgets and financial transactions (Tuovila, 2021). The financial analysis helps to determine the performance, stability, and suitability of Vila Health and to analyze whether the business is profitable. It is also helps in forecast and prediction of suitable and good decision making by the managers to bring success and profitability.
The financial analyst must be focused on the negative balance of the cash account and provide ways to increase the cash and find ways to reduce the amount of cash that goes in the payrolls by looking for ways to earn passive income. The projects that are not completed like the expansions should be completed as schedule and the project managers should find ways to reduce costs like find way to get discounts of the constructions materials. The liability of the Vila health is quite high and the analyst should find ways to reduce the credits to reduce the financial risk which might occur later. Since in the inpatient revenue is high and inpatient volume is low, the analyst should find ways to increase the volume through the marketing team like advertising their product like the new bariatric surgical practice.
The Vila health managers are considering some changes in the wage and benefits. They must reduce the wage inflation by analyzing when is the right time to hire new employees since the higher availability of new employees the lower the wage and the lower the availability the higher the wage.
Financial Position
The assets of the Vila health includes land, land improvements, buildings, fixed equipment, equipment, leasehold improvements, construction in progress, cash, accounts receivable, less-estimated uncollected and allowances, receivables from third party payers, pledges and other receivables, inventory, and prepaid expenses, investments, and intangible assets. The assets have reduced from the second year prior to the first year prior and increased in the current year (from $199,889,346 to $187,972,799 to $191,246,229) which shows a positive outlook of the business. The liabilities of the Vila Health are accounts payable, accrued compensation and the related liabilities, other accrued expenses, current maturities of long term debt, other deferred credits, notes payable, and notes and loans payable parents. The liabilities have reduced as from the second year prior to the first year prior and increased in the current year (from $234,100,457 to $223,119,826 to $231,341,925) which shows that the Vila health is under a financial risk because the number of assets in the current year is less than the number of liabilities.
Since there is a financial risk foreseen for the Vila heath, the financial analysts recommend that it increases its revenue by increase the volume of inpatients and reduce costs, reduction avoidable inventory, and reconstructing and restructuring their current liabilities by reducing their interests.
Compare Financial Position to Previous Years
The financial position of Vila health consists of the total assets, liabilities, and equity. The assets of the previous years have reduced from the second year prior to first year prior and increased in the current year (from $199,889,346 to $187,972,799 to $191,246,229). The equity has increased through the years ($34,211,111 to $35,147,027 to $40,095,696 respectively).
The recommendation to improve the financial position includes reducing unnecessary expenses, collecting debts from their debtors, selling their assets, reducing prices to attract and increase the volume of inpatients, increasing prices of certain services and making sure there is no reduction of inpatients due to high prices, increase pledges, and provide other mode of payments to attract inpatients.
Accounts Receivable Changes
Account receivable are the invoiced cash that the inpatients owe to the Vila health for the services offered (Luther, 2021). The account receivables have reduced throughout the three years from the second year prior to the first year prior and to the current year ($46,165,929, $39,102,464, $32,410,207 respectively).
The recommendation to reduce the account receivables and increase the cash flow are creating upfront fees which enable the inpatients to pay for some of the services offered or before the services are offered, reconstructing the plans where the patients sign a payment plan contract, and creating ways to deal with the patients who fail to stick to their payment deadlines by repossessing their property or end their relationship with the patients or remind them about their payment deadlines through calling and messaging them.
Analyze the Financial Obligations
The financial of obligation of Vila health are the debt that the institution must pay (HARGRAVE, 2021). The debts of the Vila health includes accounts payable, accrued compensation and the related liabilities, other accrued expenses, current maturities of long term debt, other deferred credits, notes payable, and notes and loans payable parents. In the current year some of these liabilities are paid and cleared and the remaining liabilities consist of accounts payable, accrued compensation and the related liabilities, other accrued expenses, current maturities of long term debt, notes payable, and notes and loans payable parents.
The recommendations to improve Vila health ‘s financial obligations are increasing its revenue by increase the volume of inpatients and reduce costs, reduction avoidable inventory, reducing unnecessary expenses, collecting debts from their debtors, selling their assets, reducing prices to attract and increase the volume of inpatients, increasing prices of certain services and making sure there is no reduction of inpatients due to high prices, increase pledges, providing other mode of payments to attract inpatients and reconstructing and restructuring their current liabilities by reducing their interests.
Analyze Patient Revenue
The patient revenue includes inpatient revenue, outpatient revenue, contracted adjustments, charity and uncompensated care, and other operating revenue. The total patient have reduced from the 2 years prior to 1 year prior and increased in the current year (from $272,493,489 to $271,835,518 to $274,447,283 respectively).
Since there is a minimum increase of patient revenue, the financial health of Vila health must be boosted through the following implications such as focusing on the repeat patients, introducing complimentary services without adding additional costs to increase the volume of patients, reducing prices to attract and increase the volume of inpatients, increasing prices of certain services and making sure there is no reduction of inpatients due to high prices, increase pledges, providing other mode of payments to attract inpatients, offering discounts for the repeat patients, and reinventing and restructuring their marketing strategy.
Conclusion
The main purpose of the financial analysis is to make sure the Vila health has a good financial ways and the financial analyst recommend ways to boost their financial health by reducing their expenses, account receivables, and liabilities and increasing their assets, equity and the patient revenues. The general recommendations include the focusing on the repeat patients, introducing complimentary services without adding additional costs to increase the volume of patients, reducing prices to attract and increase the volume of inpatients, increasing prices of certain services and making sure there is no reduction of inpatients due to high prices, increase pledges, providing other mode of payments to attract inpatients, creating upfront fees which enable the inpatients to pay for some of the services offered or before the services are offered, reconstructing the plans where the patients sign a payment plan contract, and creating ways to deal with the patients who fail to stick to their payment deadlines by repossessing their property, end their relationship with the patients, remind them about their payment deadlines through calling and messaging them, offering discounts for the repeat patients, and reinventing and restructuring their marketing strategy.
References
HARGRAVE, M. (2021, August 26). Obligation. Retrieved from Investopedia: https://www.investopedia.com/terms/o/obligation.asp#:~:text=Financial%20obligations%20represent%20any%20outstanding,security%20represents%20a%20financial%20obligation.
Luther, D. (2021, July 13). Accounts Payable vs Accounts Receivable: What’s the Difference? Retrieved from ORACLE netsuite: https://www.netsuite.com/portal/resource/articles/accounting/accounts-payable-accounts-receivable.shtml#:~:text=Accounts%20receivable%20are%20the%20funds,performed%20for%20them%20on%20credit.
Tuovila, A. (2021, May 21). Financial analysis. Retrieved from Investopedia: https://www.investopedia.com/terms/f/financial-analysis.asp#:~:text=Financial%20analysis%20is%20the%20process,to%20warrant%20a%20monetary%20investment.
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