Health Service Resource Management Assignment: Finance, July 2019

This document presents a comprehensive solution to a Health Service Resource Management assignment, focusing on financial aspects. The solution includes a detailed cash budget analysis for the Carlton Day Surgery, forecasting cash inflows and outflows from January to April 2018, and assessing the impact of short-term loans. It analyzes the implications of different payment scenarios and discusses the importance of accrual accounting for accurate cash balance reporting. The assignment also covers a vaccination clinic's budget, performing variance analysis to compare budgeted and actual results, and identifying factors contributing to revenue and cost variances. The solution emphasizes the importance of considering various factors and variations while preparing the budget for the next year. The document also includes references to relevant financial and accounting literature.

Running head: HEALTH SERVICE RESOURCE MANAGEMENT
Finance
Name of the Student:
Name if the University:
Author’s Note:

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Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................4
References........................................................................................................................................7

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Question 1
a) Cash Budget for the month of January 2018 to April 2018 was prepared with the help of the
cash inflows and cash outflows for the company. The amount to be borrowed would be
significantly dependent on the total available cash for the company. Total amount of money
needs to be borrowed for the month of January would be around $6,205. The source of total cash
inflow would be around $60,000 and the total disbursement will be around $66,205 (Reichard &
Van Helden, 2016).
Business Cash Budget
Details January February March April
Opening Balance 5,000 $0 $19,180 $26,390
Inflow from Patient Consultation $55,000 65,000 $35,000 $40,000
Total Cash Available $60,000 $65,000 $54,180 $66,390
Outflows:
Purchase of Consumables $30,000 40,000 $22,500 $25,000
Wages $5,700 3,000 $2,400 $2,600
Marketing Exp. $2,215 $1,050 $1,100 $1,200
Administrative Exp. $2,140 $1,150 $1,220 $1,180
Office Exp. $1,150 $620 $570 $710
Loan Repayment 20,000 - - -
Waiting Room Renovation 5,000 - - -
Total Disbursement $66,205 $45,820 $27,790 $30,690
Cash Balance/(Deficit) ($6,205) $19,180 $26,390 $35,700
Add:
Short Term Loans 6205 0 0 0
Ending Cash Balance $0 $19,180 $26,390 $35,700
b) The manager of Day Surgery can consider replacing the aging computer system for a cost of
$25,000 in the month of April as the total ending cash balance would be around $35,700. Thus,

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the company need not to borrow any amount of money in the month of April 2018 (Hernandez,
Jonker & Kosse, 2017).
c) If the cash receipts and cash expenses for the operations is done in the same month then the
reporting of all cash balances can be fairly measured in terms of payment to be done and revenue
to be received. If the same is done then the balances would differ significantly for the company
and the ending balance for the month of April would be around $13,890 (Robinson, 2016).
Business Cash Budget
Details January February March April
Opening Balance 5,000 $0 $9,810 $13,990
Inflow from Patient Consultation $30,000 35,000 $25,000 $30,000
Total Cash Available $35,000 $35,000 $34,810 $43,990
Outflows:
Purchase of Consumables $15,000 20,000 $15,000 $20,000
Wages $3,200 2,500 $3,000 $2,400
Marketing Exp. $1,225 $990 $1,050 $1,100
Administrative Exp. $1,040 $1,100 $1,150 $1,220
Office Exp. $550 $600 $620 $570
Loan Repayment 20,000 - - -
Waiting Room Renovation 5,000 - - -
Total Disbursement $46,015 $25,190 $20,820 $25,290
Cash Balance/(Deficit) ($11,015) $9,810 $13,990 $18,700
Add:
Short Term Loans 11015 0 0 0
Ending Cash Balance $0 $9,810 $13,990 $18,700
d) The day’s surgery cash position can be forecasted with the help of the given scenario
where the company will be receiving consultation fees from the month of January in the same
month the work is done. On the other hand, expenses incurred by the company would also be
paid in the same month as and when they are incurred. Thus, it is essential that while forecasting

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the cash balance the accrual balances, which was pending from the month of November and from
the month of January would be taken into account while preparing the cash budget (Hamza,
Mutala & Antwi, 2015).
Impact of changing financial condition for the company can be well judged with the help
of the changing time between the collection and payment condition as outlined where payments
will be received in the same month they are to be received. On the other hand, receiving the same
amount would be good for the company. Under the new situation where payments would be paid
on a delayed basis accordingly with the revenue receipts in the following year. On the other hand
under the old scenario the payment would be paid on a accrued basis by the company.
It was thus reviewed that the change in the financial policy of the company can though
impact the financials of the company in the initial year but at the same time it will also bring
fairness and smoothness in the financial statement of the company (Gigli & Mariani, 2018).
Question 2
a) The budget for the vaccination clinic was prepared using the information given where the cash
inflows for the vaccination company will be paid around $45 for each child and $30 for each
adult. Assuming that there will be a 10% increase in the number of both children and adults
wanting vaccinations this year the budget will be as shown:
Budgeted Results (With 10% Effect)
Particulars July August
Revenue 47,850 47,850
Costs
Vaccines 18,150 18,150
Band aids 3,190 3,190
Rent 500 500
Receptionist 700 700
Nurse 9,900 9,900

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Total cost 32,440 32,440
Net Profit/(loss) 15,410 15,410
b) The actual result and the budgeted result derived initially for the company can change
significantly due to the variance in the revenue and the costs expenses by the vaccination clinic.
The actual results had differed significantly due to the changes in the revenue of the company for
the month of July and August (Kes & Kuźmiński, 2019). The costs incurred by the vaccination
clinic have significantly impacted the cash flows in the month of July on the other hand fall in
revenue in the month of August has been the key reason for a variance. The variance analysis
derived is actually a difference between the actual plan and the budgeted plan for the vaccination
clinic. The variance analysis developed showed an unfavorable situation for the vaccination
clinic.
Variance Analysis
Particulars July
Augu
st
Revenue 12,1
50
-
8,85
0
Costs
Vaccines 9,85
0 -150
Band aids 1,41
0 -190
Rent 0 100
Receptionist 0 200
Nurse 4,10
0 -900
Total cost 15,36
0 -940
Net Profit/(loss) -
3,210
-
7,910

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c) Variance Analysis for the company will be drawn by the vaccination clinic for the purpose of
estimating the difference found between the actual and budgeted results. It is important to note
down the differences between the two as the same will be taken into consideration for the
purpose of finding out the differences between the planned and actual budget and the factors
behind the same.
During the analysis of the budgeted plan for the company it was found that the
differences in the budget for the company was primarily because of the differences in the number
of heads in children’s and adults that actually turned up in the vaccination clinic.
The change in the net profitability of the vaccination clinic was primarily due to the
same. While preparing the budget for the next year it is recommended that, the vaccination clinic
considers various factors while taking the variations observed in the following year for the
purpose of preparing the budget for the vaccination clinic.

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References
Campbell, T., Kulis, B., & How, J. (2018). Dynamic Clustering Algorithms via Small-Variance
Analysis of Markov Chain Mixture Models. IEEE transactions on pattern analysis and
machine intelligence, 41(6), 1338-1352.
Gigli, S., & Mariani, L. (2018). Lost in the transition from cash to accrual accounting: Assessing
the knowledge gaps in Italian public universities. International Journal of Public Sector
Management, 31(7), 811-826.
Hamza, K., Mutala, Z., & Antwi, S. K. (2015). Cash management practices and financial
performance of small and medium enterprises (SMEs) in the Northern region of Ghana.
International Journal of Economics, Commerce and Management, 3(7), 456-480.
Hernandez, L., Jonker, N., & Kosse, A. (2017). Cash versus debit card: the role of budget
control. Journal of Consumer Affairs, 51(1), 91-112.
Kes, Z., & Kuźmiński, Ł. (2019). Application of Extreme Value Analysis in the Assessment of
Budget Variance Risk. Econometrics, 23(2), 80-98.
Reichard, C., & Van Helden, J. (2016). Why cash-based budgeting still prevails in an era of
accrual-based reporting in the public sector. Accounting Finance & Governance Review,
23(1-2), 43-65.
Robinson, M. (2016). Budget reform before and after the global financial crisis. OECD Journal
on Budgeting, 16(1), 29-63.