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Hi Rosa and class ~ good point and absolutely true. Do any of you know about dashboards? Please review the URL below and add any comments or questions. Dashboards are the e-version of financial statements and actually calculate key indicators (ratios) in real time or against established goals.

http://www.microstrategy.com/software/business-intelligence/dashboards-and-scorecards/?CID=4653db&gclid=CMzD1J2dhLQCFYN_QgodnDgAKQ

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Hi Cathy and class ~ dashboards are more commonly in use today and any dashboard is only limited by the imagination and technology. If a dashboard displays a trouble spot, then it is important to drill down and discover the issue(s) affecting performance. In the field of healthcare management, dashboards are emerging as a standard practice along with scorecards. Scorecards provide a measurement of specific goals. Both provide more objective data and less subject to whimsical interpretations. As a manager, everyone may very well encounter dashboards and it’s important to understand their advantage over traditional reports. Also, it is more clear how technology is making management more “intelligent.”

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Good point, James. At face value, financial statements do not provide a straight answer. For example, an income and expense statement could show a loss or negative margin. However, the balance sheet may not show a difference in owners equity. Owners equity that increases is a sign of financial health. As you and the class may figure, the devil is in the details, especially when looking at financial statements without their relationship understood to each other.

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Hi Erica ~ good analysis and thanks for bringing up debt. Class ~ how do we know when debt is beyond capacity to repay? Which financial statement reveals the answer? 

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Yes, Rosa and class. Divide assets and liabilities. If the ratio is 1 or less, this is a red flag for the financial stability of the organization. Has anyone in clas heard of “days of cash on hand?”

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Thanks for sharing, Carol. Cash on hand is what matters most. Why? Because revenue and even revenue minus limits of allowance (net revenue) does not provide a realistic portrayal of cash on hand. It is not uncommon for an insurer, such as Medicare, to freeze payments for 2-4 weeks in a year. While the hospital will eventually receive the funds, if it does not have an appropriate level of days of cash, it could have to borrow in order to meet obligations. The same is true for us at home. How many days of cash on hand is appropriate for our personal financial health? What are some things that could affect cash on hand temporarily?

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“I still have $25,000 unspent in my budget and the fiscal year ends in three weeks. I need to purchase some equipment or supplies or I will lose the money.”

What is wrong with this thinking?

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Hi Jennifer and class ~ true or not true? The balance sheet is a summary of the income and expense statement.

Thanks,