Income Statements of Investor-Owned Firms
Posted on January 31, 2009 - Filed Under Finance
Our income statement discussion focused on a not-for-profit organization: Sunnyvale Clinic. What do the income statements for investor-owned firms such as HCA and Beverly Enterprises look like? The financial statements of investor-owned firms and not-for-profit businesses are generally similar except for transactions, such as tax payments, that are applicable only to one form of ownership. Because the transactions of all health services organizations in the same core business are similar, ownership plays only a minor role in the presentation of financial statement data. In reality, more differences exist in financial statements because of lines of business (e.g., hospitals versus nursing homes versus managed care plans) than differences because of ownership.
A Look Ahead: Using Income Statement Data in Financial Statement Analysis
Chapter 17 discusses in some detail the techniques used to analyze financial statements. The purpose of such an analysis is to gain insights into a business’s financial condition. At this point, however, it would be worthwhile to introduce ratio analysis—one of the techniques used in financial statement analysis. In ratio analysis, values found on the financial statements are combined to form ratios that have economic meaning and hence that help managers and investors interpret the numbers.
Taken From : HEALTHCARE FINANCE
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