Inventory analysis

Inventory analysis is the process of understanding the stock/product mix combined with the knowledge of the demand for stock/product. It is the technique to determine the optimum level of inventory for a firm.

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Inventory Analysis Inventory on hand refers to the stock that is present in an organization, ready to serve the consumers, when the need arises. On the other hand, the carry cost is the cost associated with the storage of commodities, awaiting distribution to the consumers. Sometimes, administrators find it hard to create and maintain a balance between the inventory at hand and the carry cost that is associated with the same. When an organization has too little inventory at hand, this could mean that the medical needs of the consumers are not met adequately. On the other side, too much inventory would mean that there is an unnecessary carrying cost. The best strategy would be identification of demand trends (Smith, 2015). This can help to come up with the required inventory at hand, to reduce unnecessary carry cost. For example, the administrators can use the records for the previous year to establish relevant and appropriate trends. From research carried out, the fall winter season is one that requires high inventory at hand. This is because it is associated with more infections, compared to spring summer. This would be a vital approach to help administrators in coming up with the balance that allows better service delivery and saves on the costs incurred (Murugappan, 2014). Optimizing Staffing Staffing is another issue that could offer hardships, especially when it comes to its management. The best approach to staffing is based on centralization. Human resource management should be centralized. This centralized resource management center is important for keeping track of all the staff available to the organization (Graban, 2012). Using this center, all the staff members can interact appropriately, to avoid overworking any of them. It pools the human resources together to a platform where all the employees believe that they are equal. This increases the employee satisfaction. In addition, it would be easier to identify the gaps that exist in the medical facility. Instead of hiring temporary staff, these gaps can be filled by staff from other centers. The efficiency of this exercise would function to optimize patient care. Also, it reduces the deployment cost by a large magnitude (Basavanthappa, 2014).

Financial statement analysis is an exercise that involves a review of the financial records of a company, in a bid to compare the risks involved to the experienced profitability. The chief financial officer is the individual who is in charge of this process, a role that has been assumed in this essay. The financial records that are analyzed could be annual or quarterly. There are numerous benefits that can be associated with financial statement analyses. First, it offers investors information that is vital in making decisions on where to invest their money. Secondly, it helps government agencies to determine the taxation owed to them, by these companies. Finally, it enables the company to keep track of its activities, along with their implications on its profitability. In this essay, I have carried out a financial analysis of Health Management Associates healthcare organization (HMA) for the years, 2012, 2013 and 2014. Financial health of HMA At the moment, I can be said that the financial health of this company is poor. This can be judged from the most recent financial statements that were released. In 2012, HMA had a net revenue of 1.4 billion US dollars. The revenue was followed by nine-figure profits. This was around 7% growth from the previous year. However, HMA made a loss of 320 million US dollars in 2013 and 330 million US dollars in 2014 (HMA, 2014). This shows that the company is at a huge financial risk. As a result of this negative analysis, the various stakeholders in the company might react differently. For example, employees may lose trust in the company and start seeking employment in other companies. This is because they foresee the risk of being unemployed, in case the company collapses. This could cost the company some of the experienced professionals, without whom it cannot function (Penman, 2013). Apart from the employees, there are other stakeholders who might be prompted to make important decisions in the company. Investors in the company are some of the most important stakeholders to its survival. This is because they provide funds which facilitate the day to day operations of the company. With such a financial report, some of the investors would opt to pull out. Apart from quality service delivery, investors need to see the company in which they invest making profits. This way, they can get back the value of their money. Finally, the shareholders would start speculating that there is misconduct and mismanagement in the company. This would cause some of them to sue the company for issues such as fraud. Some would opt to sell their shares in the company to avoid further losses. Clearly, this is a situation that would need to be remedied, since it threatens the survival of the entire company (Kane, 2015). Current industry trend The trend that has been observed in this industry, from 2012, is that of deteriorating companies, in terms of the risks they face, as well as the losses they make. In some cases, it leads to full closure of companies in the industry. This is a trend that is detrimental to the financial performance of the company. This is because, as the stakeholders continue to observe this trend, they continue to withdraw their support for the company. This leads to poorer performance for the subsequent years (Corelli, 2015). The impact of this trend can be minimized through several ways. One of the major methods to apply this is to change the leadership of the company. For example, the entire board of directors can be replaced by elected shareholders, who are believed to have the capacity to lead. This is a step that would affect the mentality of all the stakeholders, thus reducing the impact of this trend for the next financial year. Furthermore, it can potentially alter this trend to a positive turn. Key strategy First, it is important to point out that most stakeholders believe that corruption and fraud in the management body is the major cause of the losses that are incurred. With this, it is easier for the CFO to come up with a strategy that would be instrumental in improving the financial performance of the organization. The best strategy would be improvement of accountability and transparency in the organization (Simonovic, 2012). This can be made possible by the setting up of rules that govern the conduct of the management body. Most of the decisions and activities carried out by the board of directors should be made public. This aids in updating the shareholders of any developments. It also helps to identify any malpractices before they can cause more harm to the stakeholders. It would also cause the public to place more trust in the company. Conclusion From the above analysis, it is clear that a lot can be learnt from the financial statement of a company. In health care, service delivery should be the priority. However, any company has to be profitable, to favor its sustainability. This is why the financial statements of companies in the healthcare sector need to be analyzed in details. Once this has been achieved, recommendations can be made by the financial experts, on ways through which their performance can be improved. This is an exercise that should be carried out as regularly as possible, to identify faults and errors in their early stages.