ESSAY: Determining Financial Viability

Write a paper of 500-750 words that explains the relationship betweenfinance and accounting, and how they operate to determine financialviability within a health care organization.

ANSWER

Determining Financial Viability

            Finance and accounting are interrelated, as they are both critical components for decision making in a business. The two are relevant in health care organizations because they help managers to evaluate the going concern of a business as well as understanding financial risks and operations. For instance, accounting deals primarily with the identification, recording, classification, summarizing, and reporting of financial transactions to relevant stakeholders to help them make better decisions (Hackbarth & Gamble, 2017). Accounting also ensures that an organization has accurate and timely financial information to ensure the smooth and efficient running of the business. Finance, on the other hand, deals majorly with making investment decisions in the organization. Finance assist the organization to develop plans and strategies for long-term investment goals and objectives. Finance also help to choose the feasible projects to implement among many alternatives ….

            Although interrelated, finance and accounting are not similar. The relationship between the two arises from their roles in the organization. For example, finance utilizes figures of accounting for analysis purposes. According to Maas, Schaltegger, and Crutzen (2016), financial analysts often review and analyze the accounting information to establish the effectiveness and efficiency of organizational operations. At the same time, accounting processes entirely depend on financial functions as the data used is retrieved from financial operations before making important financial and accounting decisions (Maas, Schaltegger & Crutzen, 2016). Finances, therefore, is a common…

Budgeting is primarily carried out in the organization by finance professionals, but they highly dependent on the accounting department for the financial viability of the budget estimates. Therefore, accounting is a limited aspect compared to finance in terms of budgeting, as it depends on the available financial reports and statements showing available finances to oversee operations (Lear et al., 2016). Lastly, the relationship between both aspects is based on organizational productivity and performance. For instance, finance…

Having determined how finance and accounting interrelate, it is important to determine ways in which financial viability is attained in healthcare organizations. According to Pflueger (2015), healthcare organizations are currently experiencing increased pressure to make sure that their daily operations are aligned with the solid finance performance standard. Considering the economic instability posing a major concern recently, the performance relationship of these aspects (functions of accounting and finance) is primarily to realize healthcare-based viability in terms of operations (Pflueger, 2015). For example, adopting a balanced scorecard is an indication of this relationship. At the same time, performance is an indication of quality service, which means finance and accounting operations intended to provide accurate information, as well as arrive at viable performance-based decisions. Competition in healthcare organizations have intensified, and only those organizations with …