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Sensitivity Analysis

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by

Andrea Gaxiola

on 7 January 2014

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Transcript of Sensitivity Analysis

Patton-Fuller Community Hospital
AGENDA
Introduction- Andrea
Comparative analysis of the last two years of data-Thawakorn
2010 budget assumptions, positively or negatively affect Patton-Fuller-Laura
Trend analysis to plan for staffing at Patton-Fuller-Priscilla
Summary of trend analysis and how comparative data facilitates forecasting at Patton-Fuller- Brandon
Summary/Conclusion-Andrea
Comparative Analysis
After reviewing the balance sheet for Patton-Fuller Hospital for 2008 and 2009, there are significant differences that are noticeable.

Retained earnings (or “Net Worth” or Unrestricted Fund Balance”) drastically decreased from 2008 to 2009.
Dollar amount decrease is -209,471, decrease of over 65%.
Long-term debt increase to more than 116%
Total current liabilities also increase as a whole by 184.09%.
Operating income decreased by 98%
Non-operating income decreased 77%

Budget Assumptions
What is a budget assumption?

Assumed changes and development that the business or organization will have in the future (Elgers, Clark, & Speagle, 1974).
Includes: expected income, expenses, potential problems, and changes in the budget (“eHow Money", 2013).

Trend Analysis to Plan for Staffing
Request from Chief Nursing Officer

5:1 vs 4:1

Alternative


Introduction
Patton-Fuller 2010 Budget Assumptions
Positive affects:
Increase in patient revenue
Cost of supplies will decrease
Non-operating income
Investment income

Negative affects:
Decrease in patient volume
Increase in salary costs
Increase contracts fees
Increase in utilities
Increase interest for money borrowed

Patient and Nursing Statistics
2009 Patient Statistics
August-May
Increase in daily revenue
January 1,498,381
Daily census 428
June-July
Lowest in revenue
July 823, 560
Daily census 235

2009 Nursing Statistics
January
85.6 Nurses/day
July
47.1 Nurses/day

Proposed Solution to Staffing
Increase in staff

Effect of changing to a 4:1 nursing ratio

Effect of $1 raise for all nurses

Increase cost per month

Proposed Solution to Staffing
Increase in staff
Effect of changing to a 4:1 nursing ratio
Effect of $1 raise for all nurses
Increase cost per month

Trend Summary
Trend history:
2007,2008,2009 reports are projecting a 3% overall deflation rate due to a weak economy.
The future projections of Patton Fuller will be positive with increases in salary and benefits by 1%. (Annual Report, 2009).
Other revenue will see an increase by 15%. There will be a decrease in net patient revenue by 3%.
Utilizing all the comparative data is the foundation in making the correct forecasting for future financial data.

The future is profitable for Patton Fuller and will remain that way due to the following information.

Supplies have decreased by 15%
Benefits and Salaries increased
Effective equipment production
Improved contracts with managed care companies.
16 million gained in 2009. (CEO Davis Geach)

The total revenue and expenses all seem within normal range, but the operating income, non-operating income, and net income all have decreased and drastically. The total revenue increased by 10% that is $41,668. The expenses increased by $25,869 or 5.91%. These all seem like reasonable slight increases.

Reasons and factors contribute to fluctuations and changes
This information usually can be found in the organizational annual’s report

Utilities and other costs
Contracted maintenance
Professional fees
Computer and other usage fees

This is an accurate reason the revenue seems so different
HCS/405
Team A

Summary
Comparative analysis of the last two years of data-Thiwakorn
2010 budget assumptions, positively or negatively affect Patton-Fuller-Laura
Trend analysis to plan for staffing at Patton-Fuller-Priscilla
Summary of trend analysis and how comparative data facilitates forecasting at Patton-Fuller- Brandon

Conclusion
References
Demand Media incorporation. (2013). eHow money. Retrieved from http://www.ehow.com/info_8187389_budget-assumptions.html
Elgers, P., Clark, J. J., & Speagle, R. E. (1974, July). The role of assumptions in financial forecasts. Journal of Accountancy, 138(1), 63-68. EBSCO host.
Fitzpatrick, T., Anen, T., & Soto, E. M. (2013, September). Nurse Staffing: The Illinois Experience. Nursing Economics, 31(5), 221-229.
University of Phoenix. (2013). Patton-Fuller Community Hospital [Multimedia]. Retrieved from University of Phoenix, HCS405 website.

The importance of Budget Analysis
Income
Expenditure
Investments
Cash Flow
Helps individuals and organizations
Budget Analysis
Spending Patterns
Spending Frequency
BA flaws
Importance of budgeting
Analysis benefits
Problems
Behavioral aspects of budgeting.

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