Comparative Financial Analysis of Healthcare Accounting and Finance

This report provides a comprehensive comparative analysis of healthcare accounting and finance, focusing on two major healthcare providers: Sharp HealthCare and Scripps Health. The analysis begins with an introduction to the field of healthcare accounting and its significance, followed by a detailed examination of the companies' financial statements, including statements of financial position, operations, changes in net assets, and cash flows. The report highlights key trends, such as changes in assets, liabilities, revenues, expenses, and net income, comparing the performance of both companies over the years 2017 and 2018. Furthermore, the report delves into the comparative analysis of financial ratios, specifically the total margin ratio, to assess the overall profitability and financial health of each organization. The findings reveal insights into the financial positions, operational efficiency, and cash flow management of both healthcare providers, ultimately concluding with a comparison to determine which company demonstrates a stronger financial performance. The report aims to provide a clear understanding of the financial aspects of these healthcare organizations, highlighting the key differences and similarities in their financial strategies and outcomes.

Running Head: HEALTHCARE ACCOUNTING AND FINANCE
HEALTHCARE ACCOUNTING AND FINANCE
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Comparative Analysis of Statement of Financial Positions...................................................3
Comparative Analysis of the Statements of Operations........................................................4
Comparative Analysis of Statements of Changes in Net Assets............................................5
Comparative Analysis of Cash Flow Statements...................................................................5
Comparative Analysis of Financial Ratios.............................................................................6
Conclusions..............................................................................................................................10
Reference..................................................................................................................................12

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Introduction
The aim of this assignment is to do the analysis on the healthcare accounting and the
finance. For this analysis, two companies will be taken into considerations. The first company
is Sharp Healthcare and the second company is San Diego. Sharp Healthcare is the healthcare
leader of San Diego with having hospitals situated in San Diego, which are affiliated medical
groups, health plan and urgent care centers. It is the non-for profit regional integrated health
care delivery system, which includes total four acute-care hospitals, health plan and three
affiliated medical groups (Sharp HealthCare. 2019). Moreover, Scripps Health is the health
system headquartered in San Diego, where the top doctors’ practices at the hospitals,
emergency rooms, urgent care, walk-in clinics and outpatient clinics. The system of this
hospital includes total number of five hospitals, 19 outpatient facilities as well as they treats
annually about half million patients by the 2,600 affiliated physicians. Apart from this, this
system also includes medical education programs and clinical research (Scripps Health.
2008).
Therefore, under this assignment discussion will be done on comparative financial
statements of these two companies. In addition, discussion will be done on the financial ratios
of the company. Lastly, it should be concluded that which company is in better position.
Discussion
Health care Accounting is recognized as one of the largest industrial sector around the
world. Given the challenges faced by the financial industry, it becomes essential for the
accountant of healthcare for having the firm grasp of the financial accounting. In so many
ways, the uniqueness of the healthcare is not only in the services provided but it also
interfaces with their clients as well as other stakeholders (Fiondella et al. 2016). These
features of the uniqueness present the challenges that are exclusive to the industry for all

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those who work in these environments, which include those with the responsibilities of the
managerial accounting. The role of the accounting and the finance professionals in the
healthcare is notably evolving that includes enhancement of the focus on risk management
and internal controls, focus of executives much more on the performance and business
analytics and growth curve of the industry creating huge potential for the accounting and
finance professionals (Pflueger, 2016).
Comparative Analysis of Statement of Financial Positions
In case of Sharp HealthCare, the total assets for the year 2017 were $4,623,898 and
for the year 2018 was $5,311,693. It means that the total assets have been increased by 12%.
The total liabilities of the company for the year 2017 were $1,200,073 and for the year 2018
was $1,488,974. This means that the total liabilities of the company have increased by 19%
(Ranade, 2016). The current asset of the company in the year 2017 was $819,582 and for the
year, 2018 was 1,026,495; this means that there is increase in the current assets by 20%. The
current liabilities of the company for the year was 2017 was $463,407 and for the year 2018
was $635,718, this means that there is increase in the current liability by 27%
(Emma.msrb.org. 2019).
However, in case of Scripps Health, the total assets for the year 2017 were $5,294,172
and for the year 2018 was $5,558,102. It means that the total assets have been increased by
5%. The total liabilities of the company for the year 2017 were $1,568,488 and for the year
2018 was $1,581,854. This means that the total liabilities of the company have increased by
0.8% (Soltani, 2014). The current asset of the company in the year 2017 was $890,564 and
for the year, 2018 was $1,014,519; this means that there is increase in the current assets by
12%. The current liabilities of the company for the year was 2017 was $455,368 and for the
year 2018 was $634,029, this means that there is increase in the current liability by 28%
(Emma.msrb.org. 2019).

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Hence, it can be analyzed from the analysis of financial position of both the
companies that the financial position of Sharp HealthCare is far better than that of Scripps
Health in terms of assets, liabilities, debt and the liquidity position of the company.
Comparative Analysis of the Statements of Operations
In case of Sharp HealthCare, the total revenues of the company in the year 2017 were
$3,478,465 and for the year 2018 was $3,805,826. It means that there is increase of the total
revenues by 8.60%. The expenses of the company in the year 2017 were $3,327,369 and for
the year, 2018 was $3,607,767, which means that 7.7% (Flower, 2018). Operating income of
the company for the year 2017 was $151,096 and for the year 2018 was $198,059, which
means that 23.7%. Moreover, the excess of the revenues over the expenses of the company
for the year 2017 was $337,486 and $331,251 for the year 2018, which means that there was
decrease in the net income of the company by -1.88% (Emma.msrb.org. 2019).
In case of Scripps Health and Affiliates, the total revenues of the company in the year
2017 were $2,920,357 and for the year, 2018 was $3,243,046. It means that there is increase
of the total revenues by 9.9%. The expenses of the company in the year 2017 were
$2,852,006 and for the year 2018 was $3,157,320, which means that 9.6% (Kuzey, Uyar &
Delen, 2014). Operating income of the company for the year 2017 was $68,351 and for the
year 2018 was $85,726, which means that 20%. Moreover, the excess of the revenues over
the expenses of the company for the year 2017 was $351,817 and $226,809 for the year 2018,
which means that there was decrease in the net income of the company by -55%
(Emma.msrb.org. 2019).
Therefore, it can be analyzed from the comparative analysis of the statements of
operations that the operating condition of the Sharp Health care is better in comparison with
the Scripps Health. The revenue of the former company has increased more than that of the

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later company. The revenue of the company is decreased drastically by 55% as compare to
the former company whose revenue has been decreased by approx. 2%.
Comparative Analysis of Statements of Changes in Net Assets
In case of Sharp Healthcare, the unrestricted net assets of the company for the year
2017 were $384,412 and for the year $384,412, which means that it is stable. The restricted
net assets of the company for the year 2017 was ($319) and for the year 2018 was $12,186,
which means that there was increase of the restricted assets by 97.3%. Lastly, the total net
assets of the company at the end of the year for the year 2017 was $3,423,825 and for the
year 2018 was $3,822,719, which means that the total assets of the company has increased by
10.4% (Emma.msrb.org. 2019).
In case of Scripps Health and Affiliates, the unrestricted net assets of the company for
the year 2017 were $378,746 and for the year 2018 was $254,544, which means that there
was decrease of it by -48.79%. The restricted net assets of the company for the year 2017 was
$6,711 and for the year 2018 was $1,388, which means that there was decrease of the
restricted assets by -383.5%. Lastly, the total net assets of the company at the end of the year
for the year 2017 was $3,725,684 and for the year 2018 was $3,976,248, which means that
the total assets of the company has increased by 6.30% (Emma.msrb.org. 2019).
Hence, the comparison of the two-stated company states that the position of net assets
of the former company is far much better than later company.
Comparative Analysis of Cash Flow Statements
In case of Sharp HealthCare, the cash flows from operating activities for the year
2017 were $193,873 and for the year 2018 was $209,650. It means that there is increase of
cash from operations by 7.52% (Iotti & Bonazzi, 2014). Moreover, the cash flows from the
investing activities for the year 2017 were ($182,330) and for the year, 2018 was ($247,903).

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It means that decrease of cash from the investment by 26.45% from the previous years.
Further, the cash flows from the financing activities for the year 2017 were ($38,985) and for
the year 2018 was $196,726. It means that the cash flows from the financing activities have
been increased by 76.67% (Emma.msrb.org. 2019).
In case of Scripps Heath and Affiliates, the cash flows from operating activities for
the year 2017 were $285,920 and for the year, 2018 was $249,958. It means that there is
decrease of cash from operations by -14.38%. Moreover, the cash flows from the investing
activities for the year 2017 were ($267,294) and for the year, 2018 was ($256,445) (Robinson
et al. 2015). It means that decrease of cash from the investment by -4.79% from the previous
years. Further, the cash flows from the financing activities for the year 2017 were $23,386
and for the year 2018 was $23,460. It means that the cash flows from the financing activities
have been increased by 0.3% (Emma.msrb.org. 2019).
Therefore, it can be said that the total cash and its equivalent of Sharp HealthCare was
$289,838 for the year 2017 and $448,311 for the year 2018, which is increase by 35%.
Moreover, the total cash and its equivalent of Scripps Health was $356,903 for the year 2017
and $373,876 for the year 2018, which is increase to 4.53%. Therefore, it is clearly visible
that cash position of Sharp HealthCare is much better than the Scripps Health
(Emma.msrb.org. 2019).
Comparative Analysis of Financial Ratios
Total Margin
The total margin ratio is defined as the revenue of the organization as the function of
their expenses. Unlike the ratio of operating margin that only takes into consideration revenue
from the business operations, the total margin consists of the revenue from all the sources.
The higher ratio of total margin indicates that the organization costs are under controlled as

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well as it is making profit. The accounting data of revenues and expenses can be used by any
type of organization but it is very common within the industry of healthcare and in the
government accounting (Bosco et al. 2014). This ratio is the most convenient tool in o4der to
measure the overall profitability of the organizations. The ratio of total margin is calculated
by dividing the excess of revenues less expenses or the net income by the total revenues of
the company. This ratio provides the total percentage of the gross revenue that is realized as
the net income (Bosco et al. 2014).
In case of Sharp HealthCare, the total margin in the year 2017 was 10% and in the
year 2018 was 9% that means the total margin of the company’s operations is decreased by
1% (Khadafi, Heikal & Ummah, 2014). In case of Scripps Health and Affiliates, total margin
in the year 2017 was 12% and in the year, 2018 was 7%, which means there was decrease in
5% decrease in the total margin. Therefore, it can be said after comparison of the two
companies’ total margin, the performance of total margin of Sharp Health Care is better
(Emma.msrb.org. 2019).
Total Margin Ratio= Net Income/ Total Revenue
 The net income of Sharp Heath care was $337,486 in the year 2017 and $331,251 in
the year 2018. The net income of Scripps Health was $351,817 in the year 2017 and
for the year 2018 was $3,243,046.
 The Total revenue of Sharp Health was $3,478,465 and for the year 2018 was
$3,805,826 and in case of Scripps Health, it was $2,920,357 in the year 2017 and
$3,243,046.

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2017 2018 2017 2018
Total Margin
Net Income 337,486.00 331,251.00 351,817.00 226,809.00
Total Revenue 3,478,465.00 3,805,826.00 2,920,357.00 3,243,046.00
Result 10% 9% 12% 7%
Sharp Health Care Scripps Health and Affiliates
Operating Margin
The operating margin is defined as the performance or the profitability ratio that is
used for calculation of the profit percentage that is produced from their operations before
taking into consideration the interest as well as taxes charges. It is obtained by dividing
operating profit by the total revenue of the company. It indicates how much the company has
earned profit after paying the variable production costs (Jones et al. 2014).
In case of Sharp HealthCare, the operating margin in the year 2017 was 4% and in the
year 2018 was 5% that means 1% increase in the operating margin ratio. However, in case of
Scripps Health and Affiliates, the operating margin ratio in the year 2017 was 2% and in the
year 2018 was 3% that means 1% increase in the operating margin. Hence, after the
comparison of both the companies, it can be said that both the companies operating margin
ratio is increasing with the same percentage but the operating margin performance of Sharp
Health care is better (Emma.msrb.org. 2019).
Operating margin Ratio= Operating Profit/ Total Revenue
 Operating Profit of Sharp Health care for the year 2017 was $151,096 and for the year
2018 was $198,059. The operating profit of Scripps Health and Affiliates was
$68,351 and for the year, 2018 was $85,726.
 The Total revenue of Sharp health care was $3,478,465 for the year 2017 and for the
year, 2018 was $3,805,826. The total revenue in case of Scripps Health for the year
2017 was $2,920,357 and for the year 2018 was $3,243,046.

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Operating Margin 2017 2018 2017 2018
Operating Profit 151,096.00 198,059.00 68,351.00 85,726.00
Total Revenue 3,478,465.00 3,805,826.00 2,920,357.00 3,243,046.00
Result 4% 5% 2% 3%
Sharp Health Care Scripps Health and Affiliates
Return on Assets
The return on assets is defined as the ratio, which shows the profit percentage of the
company earned relating to their overall resources. This indicates that how much the
company is profitable in relation to its total assets. This is calculated by dividing the net
income by the total assets (Bateni, Vakilifard & Asghari, 2014).
In case of Sharp HealthCare, the return on assets ratio for the year 2017 was 10% and
for the year, 2018 was 9% that means that the return on assets ratio of the company has
decreased by 1%. However, in case of Scripps Health and Affiliates, the return on assets ratio
in the year 2017 was 9% and for the year, 2018 was 6%, which means that there is 3%
decrease in the ratio. Hence, from the comparison between the two companies, it can be said
that, the percentage of decrease of the return of assets of Scripps Health and affiliates is much
higher than Sharp healthcare. Therefore, it can be said that, Sharp healthcare performance is
better as compare to Scripps Health and affiliates because the former is utilizing their assets
much efficiently that has resulted in the returns from it (Emma.msrb.org. 2019).
Return on Assets= Net Income/ Total Assets
Sharp HealthCare for the year 2017
Net Income= $337,486
Total Assets=$3,423,825
Return on Assets= $337,486/$3,423,825 = 10%

10HEALTHCARE ACCOUNTING AND FINANCE
Sharp HealthCare for the year 2018
Net Income= $331,251
Total Assets=$3,822,719
Return on Assets= $331,251/$3,822,719= 9%
Scripps Health and Affiliates for 2017
Net Income= $337,486
Total Assets=$3,423,825
Return on Assets= $337,486/$3,423,825 = 9%
Scripps Health and Affiliates for 2017
Net Income= $226,809
Total Assets=$3,976,248
Return on Assets= $226,809/$3,976,248 = 6%
Return on Assets 2017 2018 2017 2018
Net Income 337,486.00 331,251.00 351,817.00 226,809.00
Total Assets 3,423,825.00 3,822,719.00 3,725,684.00 3,976,248.00
Result 10% 9% 9% 6%
Sharp Health Care Scripps Health and Affiliates
Conclusions
Therefore, it is concluded from the analysis that healthcare companies apart from
providing the services of healthcare to their patients also manages money as well as risks in
such a way, which helps for achieving the financial objectives of the organizations. Strong as
well as organized financial management will lead in providing efficiency in the healthcare
services. Hence, from the financial analysis of Sharp Healthcare and Scripps Health, it can be

11HEALTHCARE ACCOUNTING AND FINANCE
analyzed that the organization, which is having the better financial position is Sharp
Healthcare. The financial position of the company, its operational conditions, cash flows
position and the net assets of the company shows that this company is in good financial
position and its financial performances it increasing with the years as compare to the Scripps
Health whose financial condition is not good for meeting day to day business activities.

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