Operating and Financial Performance Indicators peer post

Operating and Financial Performance Indicators peer post

I have attached the selected peer posts that are needing a response.

Health care leaders depend on sound operating and financial performance indicators to make decisions regarding working capital management, capital budgeting, and resource allocation. These indicators help organizations maximize performance and strategically plan for new initiatives. For this Discussion, you select a health care organization and examine how its leaders and managers use operating and financial performance indicators in their decision making.

By Day 5

Respond to at least two of your colleagues’ postings and continue the Discussion through Day 7. Expand on this Discussion by providing additional insights or alternative perspectives.



Operating and Financial Performance Indicators peer post

LaChella Smith 

Week-7 discussion



Grady Memorial Hospital, frequently referred to as Grady Hospital or simply Grady, is the largest hospital in the state of Georgia and the public hospital for the city of Atlanta. It is the fifth-largest public hospital in the United States, as well as one of the busiest Level I trauma centers in the country with 697,000 patient visits each year (Grady, n.d.). Grady health system provides health care mostly to the low-income residents in Atlanta and the surrounding areas. Grady’s cash and cash equivalent for 2017 was $220,964 and 2018 it was $181,150. Grady’s accounts receivable for 2017was $61,165 and $71,281 for 2018 (Gradyhealth, n.d.).  Days cash on hand equals the cash and cash equivalent, and it’s an important liquidity (Walston, 2018). It evaluates how many days a company could pay its daily operating expenses without collecting additional cashflows (Walston, 2018).

As a leader making decisions about the working capital management as it pertains to the cash and cash equivalent would depend on the current assets and current liabilities. Again, the cash and cash equivalent are the amounts of cash on hand, and the working capital management monitors the current assets and current liabilities. So, as a leader the cash and cash equivalent would help decide how much current assets (cash on hand) to pay the current liabilities (debts/bills). Capital budgeting includes the cost of major equipment and forecasts the impact that the projects will have on the organization’s finances , patients, clinical staff, and community (Walston, 2018).  And, the resource allocation is putting resources (cash) where it’s needed to the cover liabilities.


And, accounts receivable are monies customers owe to a business for goods and services they have recovered (Walston, 2018). As a leader, accounts receivable in working capital budget management will allow them to budget according to what’s outstanding. This would give them an idea of what is owed and what has been paid. The allocation of funds as it pertains to accounts receivable will allow funds to distributed into areas where they may be lacking funds. And, capital budgeting will help them make decisions on what major equipment can be purchased now and what will have to wait due to the outstanding debts/lack of funds.


Grady (n.d.). About us. Retrieved from https://www.gradyhealth.org/

Walston, S. L. (2018). Strategic healthcare management: Planning and execution (2nd ed.). Chicago, IL: Health Administration.




Cash and cash equivalents refer to the value of a company’s assets that are in cash or can be converted into cash immediately. Cash and cash equivalent indicator can help in coming up with a metric to calculate an organization’s ability to repay its short-term debt. This information is not only useful to the organization itself but also to the creditors when deciding how much money, they can offer the organization as a loan. Thus, Cash and cash equivalents indicator can help in determining the financial condition of Grady Memorial Hospital. The indicator can be used to determine the organization’s value at any given time and raise a red flag when the organization is facing its worst condition. It shows what the company can quickly recover from its investment if need be. Cash and cash equivalent is important for funding a business in the short term and can be used to help finance inventory, operating expenses as well as capital purchases.



Cash equivalents. Retrieved from https://corporatefinanceinstitute.com/resources/knowledge/accounting/cash-equivalents/



India Seawright 



Hospitals and governments have a long tradition of using financial indicators to assess fiscal and operational activities. Financial indicators are frequently expressed as financial ratios. Ratios are a strategic management tool that provides key stakeholders with a concise and systematic way to organize the voluminous data contained in financial statements. The Mayo Clinic is part of a system of 60 sites in Minnesota, Wisconsin and Iowa, the local medical center serves the community through routine and specialized care services, as well as on- and off-site wellness support and community engagement. In their organization in Waseca, the average length of stay following a total knee replacement is five days, the average length of stay following a total hip replacement is seven days, and 85% of all of their patients are able to return home independently. As far as financial performance indicators their cash and cash equivalents for the year of 2018 were 29 million and their account receivables for other medical services were $1,828,000,000. (Mayo Clinic, 2018)

Operating and Financial Performance Indicators peer post

Monitoring financial performance and predicting financial problems are important contributions of financial ratio analysis and have been demonstrated to help hospitals and local governments reduce costs, increase profits, and continue operations. (Suarez, 2011) This is very important for leaders to know when making decisions about working capital management, capital budgeting, and resource allocation.



Mayo Clinic. (December 31, 2018). Consolidated Financial Report. Retrieved from https://cdn.prod-carehubs.net/n1/802899ec472ea3d8/uploads/2019/02/Mayo-Clinic-Year-End-2018-Consolidated-Short-Form.pdf

Mayo Clinic. (2018). Length of stay. Retrieved from  https://mayoclinichealthsystem.org/locations/waseca/about-us

Suarez, V., Lesneski, C., & Denison, D. (2011). Making the case for using financial indicators in local public health agencies. American journal of public health101(3), 419–425. doi:10.2105/AJPH.2010.194555



Monitoring financial performance for an organization on a regular basis is one of the most important tasks for any organization to be successful. Financial indicators help the management to understand where the business currently stands from a performance standpoint. It also helps in predicting where the business is heading based on its current performance. The management can therefore make key decisions based on the financial indicators that can help to improve the business’s performance over the long term. In Mayo Clinic’s case, the cash and cash equivalents and the account receivable indicators can help the management in making decisions in certainty and confidence (DolfinBlue, 2019). This helps the management to foresee any issue that may affect the organization growth and mitigate it.

Operating and Financial Performance Indicators peer post



DolfinBlue (2019). The importance of monitoring financial performance. Retrieved from https://dolfinblue.com/the-importance-of-monitoring-financial-performance/




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