Lesson 5: Financial Statements and Their Analysis

1. � Robert A. McLean, 2004 Lesson 5: Financial Statements and Their Analysis This is where your expertise in financial accounting will definitely come into play. If you are feeling rusty on financial accounting, go back to your textbook (or to Anthony and Pearlman�s programmed study guide) NOW. Review the basic definitions of financial accounting, the basic rules of Generally Accepted Accounting Procedures, and the basic rules for revenue recognition under the accrual method. We don�t have time or space to go back over those issues here, but understanding them is a prerequisite to handling this lesson. You may notice that, with 22 slides, this is our longest lesson. Take your time. Financial statements can be very revealing and their study is important to anyone who works in management. You�ve already noticed that your reading assignment is from a different book: William O. Cleverly�s Essentials of Healthcare Financial Management. This is the standard reference on financial statement analysis of health care organizations, and we all use Cleverly�s definitions of the relevant ratios (even though they differ a bit from standard, non-health related, definitions). In the spirit of the upcoming holidays (and because of the clumsiness of the electronic reserve process), I am reducing your assigned reading to Chapter 7 only. EnjoyThis is where your expertise in financial accounting will definitely come into play. If you are feeling rusty on financial accounting, go back to your textbook (or to Anthony and Pearlman�s programmed study guide) NOW. Review the basic definitions of financial accounting, the basic rules of Generally Accepted Accounting Procedures, and the basic rules for revenue recognition under the accrual method. We don�t have time or space to go back over those issues here, but understanding them is a prerequisite to handling this lesson. You may notice that, with 22 slides, this is our longest lesson. Take your time. Financial statements can be very revealing and their study is important to anyone who works in management. You�ve already noticed that your reading assignment is from a different book: William O. Cleverly�s Essentials of Healthcare Financial Management. This is the standard reference on financial statement analysis of health care organizations, and we all use Cleverly�s definitions of the relevant ratios (even though they differ a bit from standard, non-health related, definitions). In the spirit of the upcoming holidays (and because of the clumsiness of the electronic reserve process), I am reducing your assigned reading to Chapter 7 only. Enjoy

2. � Robert A. McLean, 2004 Remember the Accounting Cycle: Journal entries Post to accounts Trial balance Balance Summarize in financial statements Audit The point here is that, although cycles, by definition, don�t have beginnings and endings, the preparation of financial statements is, in some ways, the whole point of accounting. All of the transactions of the organization are summarized in the statements.The point here is that, although cycles, by definition, don�t have beginnings and endings, the preparation of financial statements is, in some ways, the whole point of accounting. All of the transactions of the organization are summarized in the statements.

3. � Robert A. McLean, 2004