Comprehensive Financial Analysis of Stanford Health Care's Performance

This report provides a comprehensive financial analysis of Stanford Health Care, examining its balance sheet and income statement over a period of time, using tools like horizontal and vertical analysis. The analysis reveals key trends and variances in financial metrics such as cash and cash equivalents, investments, accounts payable, accrued liabilities, and various expense categories including salaries, professional services, supplies, and depreciation. The report highlights significant percentage changes across different years, indicating shifts in liquidity, profitability, and overall financial health. It also explores factors impacting the income statement, including provision for doubtful accounts, salaries and benefits, and various operating and investment incomes, with the goal of understanding the underlying reasons for observed financial performance changes. The report also includes a bibliography of relevant financial literature.

Running head: HEALTH FINANCIAL MANAGEMENT
HEALTH FINANCIAL MANAGEMENT
Name of the Student
Name of the University
Author’s Note

1HEALTH FINANCIAL MANAGEMENT
MEMORANDUM
TO: Linda Hoff, Stanford's CFO
FROM: Stanford Healthcare
DATE: February 10, 2020
SUBJECT: Consolidated Balance sheet and Income statement of the Stanford Health Care
This memorandum has been prepared to analyze and interpret the financial statements of
the Stanford Health Care, and to find the reasons behind significant variances in key figures of
the financial statements. Various financial statement analysis tools and techniques such as
horizontal and vertical analysis have been used for the analysis.
Balance Sheet
Cash and cash equivalent shows a negative change of 8% between 2018 and 2017 as the
amount reduced from $710109 to $652256.The % change states that the liquidity of the company
have been decreased as compared to the previous year.
Other receivables of the company have been reduced showing a percentage of 24% in
negative. The amount is reduced from $92961 to $71112.
Investment of the company showing a negative percentage at 16% which means that a
company is undergoing a financial loss and low rate of return on an investment over a period of
time. The amount stood at $132273 in 2016 which decreased to $111664 in 2017.

2HEALTH FINANCIAL MANAGEMENT
Investments in company managed pools tends to decrease consecutively for the last
three years (2015, 2016 and 2017). The percentage change between 2016 and 2015 stood at 9%
in negative and percentage change between 2015 and 2014 stood at 2% in negative.
Assets limited as to use, held by trustee is decreasing consecutively for the last three
years. There has been a negative percentage of change between 2018-17, 2017-16 and 2016-15 at
100%, 75% and 59%.
Other assets of the company has also been decreasing for the last three years at a negative
percentage of 16%, 18% and 23%. It implies that the total assets of the company is declined due
to such negative percentage change.
Accounts payable and accrued liabilities has been increased from $282134 to $335995
in 2016 showing a percentage change of 19.1 % between 2016 and 2015. Again, it showed a
percentage change of 46% between 2018 and 2017. Overall, it creating a negative impact on the
company.
Accrued salaries and related benefits has been increased from $202859 to $236819 in
2016 showing a percentage change of 16.7 % between 2016 and 2015. Again, it showed a
percentage change of 8% between 2017 and 2016.
Due to related parties has also shown a consecutive increase for last three years. The
percentage change between 2018-17, 2017-16 and 2016-15 at 39%, 17% and 41.5% respectively.
Third-party payor settlements shows a percentage change between 2016-15 of 154.5 %
and 2018-17 of 90%.

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Current portion of long-term debt shows a percentage change of 9% between 2018-17
suggesting that the company’s long term debt has increased from $13335 to $ 14505.
Self-insurance reserves and other under current liabilities have increasing
consecutively for the last three years. The percentage change between 2018-17, 2017-16 and
2016-15 at 20%, 6% and 23.8% respectively.
Total current liabilities of the company showed a consecutive percentage change between
the relative years 2018-17, 2017-16 and 2016-15 at 1%, 14% and 15.7% respectively.
Self-insurance reserves and others, net of current portion showing a negative variances at
7% and 10% between 2018-17 and 2017-16.
The percentage change between 2018-17 and 2016-15 of Other long term liabilities stood
at 292% and 51.4% respectively.
Pension liability and Long-term debt, net of current portion showed a percentage change
of 27.8% and 44% between 2016-15 and 2018-17 respectively.
Total liabilities of the company showed a percentage change of 19% and 10% between
2018-17 and 2016-15.
Non-controlling interests under net assets showed a negative percentage change of
15% and 12.4% between 2018-17 and 2016-15.
Income statement
Provision for doubtful accounts showed a negative percentage change of 25%, 39% and
4% between 2018-17, 2017-16 and 2016-15 respectively.

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Net assets released from restrictions used for operations stood at a percentage change of
56% and 40% between 2018-17and 2016-15.
Salaries and benefits expenses increased for the last consecutive years and the percentage
change between 2018-17, 2017-16 and 2016-15 is at 5.3%, 7.4% and 29.6%.
Professional services stood at a percentage change of 7.7% and 4.3% between 2018-
17 & 2016-15.
The percentage change between 2018-17, 2017-16 and 2016-15 of supplies expense
stood at 13.9%, 10.3% & 9.7%.
Purchased services expenses increased for the last consecutive years and the percentage
change between 2018-17, 2017-16 and 2016-15 is at 7.1%, 7.4% & 15.9%.
Depreciation and amortization has also increased consecutively and showed a
percentage change between 2018-17, 2017-16 and 2016-15 at 14.3%, 13.4% & 24.3%.
Interest expense showed a percentage change between 2017-16 of 10%.
Other expense also increased at a percentage change of 24.3% and 8.3% between 2018-
17 & 2016-15.
Expense recoveries from related parties stood at a percentage change of 7.3%, 8.1% &
12.1% for the last consecutive years.
Total operating expenses increased consecutively and stood at a percentage change of
8.8%, 6.9% & 20.1% between the respective years.
Income from operations and Interest and investment income have been decreased and
showed a negative percentage change of 47.5% & 13% between 2016-15.

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Increase in value of company managed pools have been reduced at a negative
percentage change of 23.4% & 55.5%.
Swap interest and change in value of swap agreements stood at -43.7%.
Loss on extinguishment of debt and Contribution income from Stanford Health Care-
Valley Care affiliation showed a percentage change of -100% between 2016-15.
Excess of revenues over expenses showed a percentage change of -2.9% & -82%.
Transfer to Stanford University, net stood at 41.5% & 33.8% between 2018-17& 2016-
15.
Percentage of change between 2017-16 & 2016-15, Transfer (to) from Lucile Salter
Packard Children's Hospital stood at -100% & -112.4% and Change in net unrealized gains on
investments stood at -15% & -150.9%.
Purchase of property and equipment stood at -76.6% and -57.5%.
Change in pension and postretirement liability stood at -7827.5% and -99.6%.
Non-controlling capital distribution, nets stood at -498.7% and -130.1%.
(Decrease) increase in unrestricted net assets stood at -3.1%, -2099.8% & -106.4%.
Transfer from Stanford University showed a percentage change of -20.8% & -34.9%
between 2018-17& 2016-15.
Contributions and other stood at -60.4% between 2016-15.
Investment income showed a negative percentage of change between 2018-17& 2016-15
of -84.7% & -55.4%.

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Gains on company managed pools stood at -14.6% & -33.7% between 2017-16 & 2016-
15.
Operations showed a percentage change between 2018-17 & 2016-15 of -55.9%, -40.2%,
and Purchase of property and equipment stood at -77.6% & -57.5%.
Contributions showed a percentage change between 2018-17 at -64.4%.
(Decrease) increase in net assets showed a negative percentage change of -8204% and -
101.5% between 2017-16 & 2016-15.

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Bibliography:
Bragg, S. M. (2018). The Interpretation of Financial Statements. AccountingTools, Incorporated.
Fu, J. (2016). Assessment of Solvency of a Company in the Automotive Sector.
Harris, P., & Dilling, P. (2017). Case Study: Consolidated Balance Sheet At Date Of
Purchase. Journal of Business Case Studies (JBCS), 13(1), 1-4.
Huang, R. (2019). Financial Situation and its Assessment in Wanda Group Company.
Kovalev, V. I. (2017). ASSESSMENT METHODOLOGY OF IMPACT OF AMORTIZATION
POLICY ON FINANCIAL POSITION OF COMPANY. Herald, 30.
Wang, K. (2017). Financial Situation Evaluation of the Company Ctrip. Com International Ltd.

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