Determine the revenue variance from Arcadia Hospital’s 2005 budget. • Address the following: Is the variance positive or negative? Which is desirable, a positive or negative variance? Why? What do you think are some of the possible causes for this variance? How would you adjust Arcadia Hospital’s 2006 budget in light of your variance analysis? Explain your answer. Please I need this no later than 7 pm on Thursday 3/26/09.
Already Tried: Resource: Ch. 8 of Financial Management - Text:McLean, R.A. (2003). Financial management in health care organizations (2nd ed.). Clifton Park, NY: Delmar Learning.
In order to calculate the variance, please provide the revenue figures.
These are approaches to valuation:
Rules of thumb: (twice annual revenues) = $1136 million
2) Adjusted book value: (owner's equity) = $7900 million
3) Discounted cash flow:
Cash flow amount
Capitalization rate
Value
$655 million (assume same as 2006!)
6%
$10,917
8%
$8,187
10%
$6,550
12%
$5,458
Although there are many ratios in use, some of the key ratios are formulated and described below:
These two ratios are short-term liquidity ratios. They are calculated to ascertain how well a business is in paying its current liabilities, in case it has to in an emergency situation.
If you need anything else, please let me know. Thank you! Customer/p>
Determine the revenue variance from Arcadia Hospital's 2005 budget.
Is the variance positive or negative?
Looking only at revenue:
Patient Revenue for '05 = 500 while budget = 550, this means that patient revenue is under budget. Since the focus is on revenue and not costs, under budget is unfavorable, meaning that there was less actual revenue than expected when the budget was created.
Net patient revenue is under budget by 49, unfavorable, less incoming revenue than planned with the budget.
Total Operating Revenue: under budget by 29, unfavorable, less incoming revenue than planned with the budget.
Which is desirable, a positive or negative variance?
When focusing on revenue, it is favorable to be over budget, more actual revenue than planned with the budget. Under budget, would indicate less revenue than budgeted which is unfavorable.
When focusing on costs, it is favorable to be under budget, less actual costs than originally budgeted. It is unfavorable to be over budget, more actual costs than budgeted.
Why? What do you think are some of the possible causes for this variance?
Some possibilities for the revenue shortage could be too much competition from other hospitals, more advertising from other hospitals, and poor level of care from this hospital. Another possibility is low prices.
How would you adjust Arcadia Hospital's 2006 budget in light of your variance analysis?
If the hospital does not expect to take action to increase revenue, then the plan for future years may need to be lowered if they expect diminished revenue streams going forward.
Experience: Certifications in all MS Applications, MBA
Bill,
Thank you so very much for your help. I have also posted another question. Could you take the time to see if you could help me with it? It is a final finance project. I will wait for your response.
I'm not seeing your new question. To appear on my list of possible questions it needs to be under the homework experts category. Please accept the completed question.
I will repost my other assignment. I will also add an additional $10.00 to the $65.00 already posted for to pay for this reply. I will post my assignment to the financial expert with your name on it.
Thank you,
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Justanswer has given this assignment to Mohammad Ali. I don't know how to change this once it has been accepted by someone else. I will however, post to the homework expert requesting your name to pay you for your time here. I hope that is adequate.