As a health care manager, daily management tasks include financial management. Financial management includes items such as labor cost, equipment cost, and a budget that controls the operations. Operations requires management planning and control. The budget is created using the basic financial information and accounting principles information that an organization reports in its monthly, quarterly, and annual financial reports.

After learning the basics of financial statements, it is very important for a health care manager to understand the basic five areas of performance that set the financial plan for the organization. Define and provide an example of what the following mean:

• Short-term solvency
• Activity
• Financial leverage
• Profitability
• Value

Define the following terms, and explain why they are important in a health care organization:

• Current ratio
• Total asset turnover
• Debt ratio
• Profit margins

Include a minimum of 2 references.

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