Description
This comprehensive academic presentation by Dr. Davy Wadula Zulu offers a thorough introduction to financial accounting, specifically tailored for healthcare management. It establishes the fundamental role of finance as the backbone of any business, including non-profit healthcare organizations, and explains the three core areas of the finance function: the procurement, utilization, and distribution of funds. The lecture meticulously details basic accounting concepts such as the separate entity, going concern, cost, accrual, and dual aspect principles. It defines key financial terms including various types of profit, assets, liabilities, and dividends. The core of the material is dedicated to the four basic financial statements—the balance sheet, statement of comprehensive income, statement of changes in equity, and statement of cash flows—explaining their purpose, structure, and specific utility for decision-makers within a healthcare environment. The presentation concludes with an overview of financial reporting, analysis, and the critical importance of internal control methods for ensuring integrity and compliance. This resource is essential for tertiary-level students and professionals in health policy, management, and administration seeking to build a solid foundation in healthcare financial management and accounting principles. Download this presentation to gain the analytical skills necessary for interpreting financial health and guiding strategic decisions in healthcare institutions.
What's inside
Introduction to Financial Accounting Introduction The goal of financial management is maximizing wealth of the Organisation. Finance is the backbone of every business. No activity in the business can be carried out as per expectations of management without proper support of finance function. Understand the meaning, significance, objective and role of finance function in healthcare is pivotal. Principles and practice of financial accounting Business is exchange of goods and services for profit. Profit is a function of revenue and expenses. Business earns revenue only when goods and services are delivered to customer where, when and how he wants. Thus unless expenses are incurred first by business it cannot earn profits. Finance function deals with organizing funds required for these expenses. Finance function permeates throughout the organization. No activity in business can be effectively and efficiently carried out without proper support of finance function. Even for non-profit making organizations, it is a necessary function. Finance function is fundamental to every business and is foundation of any commercial activity. It is necessary for survival and success of any business. Finance is a service function and it must give proper support to all functions in an organization which is useful for decision-making and control throughout the organization. Scope of finance function extends to following three areas namely Procurement of funds (Financing decisions) Prime responsibility of finance management is to ensure that sufficient amount of funds is made available to all business activities all the times. 2) The quantum of funds required by business depends upon goal of business and plans of management to achieve this goal. 3) Finance management has to assess volume of funds required, when they are required and locate sources from which these funds can be procured. 4) Company has following sources available for procuring funds: Ÿ Share Capital Ÿ Debenture Capital Ÿ Loan Capital 5) Funds are required for two main purposes. Long-term funds are required for creating infrastructure and building production capacity as well as for developing sales network required to achieve the desired goal. Short-term funds are required for meeting day-to-day fund requirements of the organization. 6) Long-term requirements are met by issuing share capital, debenture capital or by taking long-term loan. Short-term requirements can be met by taking short-term loans known as working capital loans from banks or financial institutions. 7) While deciding a particular source of finance following factors need consideration Ÿ Cost of funds, i.e. interest and other costs Ÿ Convenience of organization Ÿ Risks involved 8) Interest charged by banks depends on percentage of Cash Reserve Ratio( C.R.R) and Statutory Liquidity Ratio (S.L.R) to be maintained by banks. Banks have been given powers to negotiate interest rates within certain limits. Finance manager must keep in mind the changes in C.R.R. and S.L.R. and try to negotiate with banks for lower rate of interest. 9) Funds are also available at cheaper rates from many foreign sources. Manager must take advantage of these opportunities so that interest cost would come down and it would be useful for reducing product cost, which is very much essential for competitive advantage of the firm. (b) Utilization of funds (Investment decisions) Funds procured are to be properly deployed in the business and finance manager has to ensure that funds deployed in various areas of business are properly utilized. For this, he should initiate following actions: Assess exact finance requirements of various divisions. Deploy funds only which are required and only when they are required. Ensure that funds are utilized for the purposes as desired by Board of Directors . Employ various techniques such as budgets, standards, plans, MIS, cost reduction etc. to ensure that funds are efficiently used by all divisions of company. Analyse financial performance of organization and periodically perform top management regarding utility of funds and profitability of various divisions and organization on a whole. Initiate various actions to correct the situations wherever there is deviation from predetermined level of fund utilization and analyze its effect. Finance manager has to ensure top management that required Returns on Investment (R.O.I) would be available to shareholders of company. (c) Distribution of Funds (Dividend Decisions) Providers of equity funds expect returns on their investments and providers of loan funds expect …
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