- Balance sheet
A balance sheet is a financial statement prepared by and organization’s financial department that summarizes the company’s liabilities, assets and the equity of the shareholders at a given point of time. These three components of a balance sheet give existing and potential investors a clue as to the financial position of the company, i.e. what it owes and it is owed.
In the balance sheet, the assets are listed first in order of their liquidity. The liabilities then follow. The equity is the calculated as the difference between the assets and the liabilities. Another way of looking at it is by treating the assets as the sum of total liabilities and the owner’s equity.
The main strength of a balance sheet is that it is able to display a company’s real strength. By listing the organization’s assets, liabilities as well as the owner’s equity, a balance sheet essentially provides a critical snapshot or picture of the weaknesses and strengths of the companies.
On the other hand, a balance sheet has several weaknesses and the primary one relates to a limitation in the quantification of assets. The other weakness is that the company’s employee’s quality cannot be listed on the balance sheet as well as other intellectual property that the organization is yet to value.
The balance sheet is linked to other financial statements like the income statement and the cash flow statement in a variety of ways. For instance in the income statement, the decrease or in increased of an entity’s net assets arising from the loss or profit that are reported or recorded on the income statement are is typically incorporated into the balances that are recorded in the balance sheet at the end of a particular business period.
The Cash flow statement is also linked to the balance sheet as it essentially explains the eventual effects of cash equivalent changes balance, both at the commencement and the end of business period. This is done in terms of cash flow impact that is brought about by changes in the balance sheet components including the liabilities, assets and the equity.
- The Organization
NMHC is a modern healthcare organization that avails a comprehensive set of healthcare and medical services to the community. The organization offers prevention, diagnosis as well as treatment services for a wide range of clients. In addition, the organization is involved in a lot of charitable activities in the community where it has initiated several diseased prevention intervention strategies.
- Horizontal Analysis of NMHC healthcare organization balance sheet
However, the final computational of the net income shows that between the two periods, the profit increased by a very huge figure. Therefore, between the two periods indicated in the balance sheet, NMHC as a healthcare organization was very profitable.
Doloughan, F. J. (2011). Contemporary narrative: Textual production, multimodality and multiliteracies. London: Continuum.
Friedlob, G. T., & Plewa, F. J. (1996). Understanding balance sheets. New York, N.Y: J. Wiley & Sons.
Barrow, C., & Barrow, C. (2008). Practical financial management: A guide to budgets, balance sheets and business finance. London: Kogan Page.