Complete an Online Quiz Demonstrating Your Knowledge of Financial and Management Accounting: Financial Management in Healthcare Assignment, RCSI

Learning Outcomes:

On successful completion of this module students will be able to:

1. Compare and contrast the main principles of financial and management accounting.
2. Prepare and evaluate a Business Case
3. Interpret and critically analyze financial information.
4. Assess and demonstrate examples of good financial management.
5. Critically discuss, budgeting and costing, revenue and capital expenditure, and how they inform decision making in organizations.
6. Critique the necessity for good financial policy and practice.

Section 1: Finance & Accounting Quiz

Complete an online quiz demonstrating your knowledge of financial and management accounting [assesses learning outcome 1]. The quiz is located on the VLE.

Section 2: Report

[Assesses learning outcomes 1, 2, 3, 4, 5, & 6]

The written submission assesses all six learning outcomes.

The assessment has three main parts covering practical accounting questions, proposing and justifying a business case, and finally, a proposal for budgeting and costing.

Part I – Complete (a) or (b)

(a) Medi-Plus a medical supplies & service company, has produced the following Trial Balance on the 31st December 2018:

Required:

• Draw up a Profit & Loss Account for Medical Solutions plc for the year ended 31st December 2018 and a Balance Sheet at that date.

Depreciation is to be provided as follows only using the current value listed

The depreciable amount for the above items is considered to be the full amount.

• Ratios and figures obtained from last year’s accounts (31st December 2017) are as follows:
  1. Current Ratio of 1.9
  2. Acid Test Ratio of 1.2
  3. Gross Profit Margin 43%
  4. Net Profit Margin 15%
  5. Return on Capital Employed 15%

• Calculate the above ratios for 2018. Using ratios and any other information available to you, from 2017 and 2018 accounts, analyze what is happening at Medical Solutions plc. Explain in an evaluative way what other information, not provided, would have helped you with your analysis?
• The Chief Executive of Medi-Plus has asked you for advice on the company’s situation. What advice would you give him/her? The response should include the positives and negatives associated with your proposed actions and be supported by reference to the literature.

OR

(b) Vita Health WLL, a healthcare company run by the Hassan family, has recently been experiencing liquidity problems. The company has an overdraft of 50,000BD on the 31st of May 2019 and the bank has been pressing for a reduction in this overdraft over the next six months. The Hassan family is unwilling to raise finance through long-term borrowing.

The following projections for the six months ended 30th November 2019 will be as follows:

Sales and purchases

1. 70 percent of sales are on credit and 30 percent are cash sales. Credit sales are received in the following month. Credit sales in May were 140,000BD. All purchases are bought on one month’s credit. On the 31st May 2019, the company has Creditors of 150,000BD.
2. Wages are 20,000BD for each of the first 2 months. However, this will increase by twenty percent from the beginning of August 2019. All wages are paid in the month they are owed.
3. Administration expenses are expected to be 6,000BD in each of the first 3 months and 8,000BD in the following months. These figures include a monthly charge of 1,000BD in respect of depreciation of fixed assets. Administration expenses are paid in the month they are incurred.
4. Selling expenses are expected to be 3,000BD per month except for August 2019 when an advertising campaign costing 6,000BD will also have to be paid for. The advertising campaign will start at the beginning of September 2019. Selling expenses are paid for in the month they are incurred.
5. An outstanding dividend of 50,000BD will be paid out by the company in June 2019.
6. The company intends to purchase, and pay for, new fixtures and fittings in the last week of August 2019 for 57,000BD. These will be delivered in September 2019.
7. Stock as at the 31st May 2019 is 250,000BD.

Required:

• Prepare a cash flow projection for Vita Health WLL. for each of the six months to 30th November 2019.

• Critically explain ways in which the company might reduce the bank overdraft, over the next 6 months, as required by the bank. Explain in an evaluative way any advantages or disadvantages of pursuing these courses of action. Support with reference to the literature.

An outstanding dividend of 50,000BD will be paid out by the company in June 2019.

• Critically explain the benefits associated with cash flow forecasting. Explain in an evaluative way why businesses can experience cash flow problems and what happens if a business runs out of cash. Support with reference to the literature.

Part II – Business Case (Budget Impact Analysis)

Critically evaluate a service area in your organization and identify an area for improvement. Once you have identified the area for improvement work through the Budget Impact Analysis steps for that improvement. Draft a costed Business Plan (Budget Impact Analysis) for submission to your Board providing suggested solutions to the issues outlined. Provide supporting backup for your proposal with relevant data and assumptions including the consideration of associated risks/benefits (both tangible and intangible). The Business Plan must be clearly tied to your organization’s corporate strategy.

Part III – Budgeting

Budgeting & Costing: How they are used to inform decision making

Prepare a paper for the executive board of your organization on budgeting and its importance in setting good financial policy. Review your organization’s approach to the budgeting process and financial control and critically evaluate the organization’s approach to budgeting. In your answer you will need to:

• Describe your organizations current approach to the process of budget (e.g. bottom-up) with reference to the literature
• Critically analyze the budgets used (e.g. zero-based, flexible)
• Evaluate the method of budgetary control used (e.g. variance analysis, frequency of analysis)
• Outline at least two areas for improvement and justify these changes to your executive board with reference to the literature.

Section 3: Online Presentation

Provide one presentation (maximum 10 minutes) presenting your costed Business Plan (Budget Impact Analysis) (5 mins) and the budgeting areas for improvement (5 mins) to the Board of your organization [assesses learning outcomes 3, 5, and 6]. Please see the VLE for the PowerPoint template and instructions for using Loom to record and share the presentation.