Business Planning and Finances in Healthcare Book Chapter Report
Chapter 8
8.1
Planning and budgeting are crucial as they precisely match the expectation and “preparing for the future” with the actual accounting figures (Gapenski, 2012, p. 277). Thus, planning provides the general amount of goals and processes an organization wishes to do while budgeting accounts these plans and links them to the figures and financial capacities. Budgeting, accordingly, prevents from overspending or financing the unprofitable or non-perspective projects that secure the company from a failure.
8.2
The planning process falls into strategic, operational and financial plans (Gapenski, 2012, p. 258). The strategic planning divides into values, mission, and vision statements. The values cover the core priorities, the mission includes purposes and reasoning for the organization’s existence, vision explains a potential organization’s future in a certain period of time. The organizational plan outlines specific attainable aims, e.g. performance quality maintenance, competitiveness achieving, policies, etc. The financial plan covers financing issues including condition, investment, budget, capital policy, etc.
8.3
The components of the financial plan are a long-term plan, a working capital management plan and a managerial accounting plan (Gapenski, 2012, p. 258). The long-term plan includes a capital budgeting for the forecasted
financial statements for a five-year period. A working capital management plan provides a day-to-day guidance for the short-term financial operations. The managerial accounting portion provides financial goals at the micro level and controls frequent operations.
8.4
Statistics, revenue, expense and operating budgets are related as they all predict company’s operations from the various aspects. The statistics budget is a basis for every other type of budget (Gapenski, 2012, p. 263). The accuracy of it is crucial as it marks the precision of all the other budgets made on its example. The revenue one is similar as it predicts the amount of reimbursement and profits with a precise date of their obtainment. The expense one derives from a statistical one and marks the labor and non-labor expenses. The operating one conveys both the revenue and the expense budgets to trace the general profitability of the enterprise. Thus, all the budgets are related as they depend on one another and are generally based on statistical calculations.
8.8
a) Static budget, flexible budget, and actual results are related as they all trace planning. The first – a static one, observes a preliminary planned budget. The second – a flexible one, is made after the fact (Gapenski, 2012, p. 270). The flexible budget and its comparison with the static one is needed to trace the amount of formerly planned and attained tasks after the budget period is over. The …
