introduction moorthi

7/29/2019 Introduction Moorthi

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1.1Introduction:

Financial management is that activity when is concerned help planning and

controlling of the firms financial resources through it was a branch of economics till

1980 as a separate activity or discipline it is of recent orgin or unique body. Financial

Management is concerned with the duties of the finance manager in a business firm. He

performs such varied tasks as budgeting, financial forecasting, cash management, credit

administration, investment analysis and funds procurement. The recent trend towards

globalization of business activity has created new demands and opportunities in

managerial finance.

Financial statements are prepared and presented for the external users of

accounting information. As these statements are used by investors and financial analysts

to examine the firms performance in order to make investment decisions, they should be

prepared very carefully and contain as much investment decisions, they should be

prepared very carefully and contain as much information as possible. Preparation of the

financial statement is the responsibility of top management.

The financial statements are generally prepared from the accounting records

maintained by the firm. Financial performance is an important aspect which influences

the long term stability, profitability and liquidity of an organization.

Meaning of Financial ManagementFinancial Management means planning, organizing, directing and controlling the

financial activities such as procurement and utilization of funds of the enterprise. It

means applying general management principles to financial resources of the enterprise.

The financial management means:

1. To collect finance for the company at a low cost and

2. To use this collected finance for earning maximum profits.

Thus, financial management means to plan and control the finance of the company. It is

done to achieve the objectives of the company.

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Definition for financial management:

According to james & messie "Financial management is concerned with raising

financial resources and their effective utilisation towards achieving the organisational

goals.".

According to Richard A. Brealey,

"Financial management is the process of putting the available funds to the best advantage

from the long term point of view of business objectives."

Importance of financial management

1. Financial management, can protect the business from pre-carious mis-management of

money.

2.Financial management teaches that this is not good outflow of funds which is invested

in inventory. Blocked inventory never generate earning and balance sheets stock value

gives idea that the company is not capable to sell products quickly.

3. Moreover, it increases risk of liquidity. Inventory management is the part of financial

management and using inventory management can be the best way to solve the problem

of overstocking.

4.Financial management makes good financial structure to minimize cost, risk and

control of borrowed money.

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Functions of Financial Management

1.Estimation of capital requirements: A finance manager has to make estimation with

regards to capital requirements of the company. This will depend upon expected costsand profits and future programmes and policies of a concern. Estimations have to be

made in an adequate manner which increases earning capacity of enterprise.

2.Determination of capital composition: Once the estimation have been made, the

capital structure have to be decided. This involves short- term and long- term debt equity

analysis. This will depend upon the proportion of equity capital a company is possessing

and additional funds which have to be raised from outside parties.

3.Choice of sources of funds: For additional funds to be procured, a company has many

choiceslike-

a. Issue of shares and debentures

b. Loans to be taken from banks and financial institutions

Public deposits to be drawn like in form of bonds. Choice of factor will depend on

relative merits and demerits of each source and period of financing.

4.Investment of funds: The finance manager has to decide to allocate funds into

profitable ventures so that there is safety on investment and regular returns is possible.

5.Disposal of surplus: The net profits decision have to be made by the finance manager.

This can be done in two ways:

a. Dividend declaration - It includes identifying the rate of dividends and other benefits

like bonus.

b. Retained profits - The volume has to be decided which will depend upon expansion,

innovational, diversification plans of the company.

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6. Management of cash: Finance manager has to make decisions with regards to cash

management. Cash is required for many purposes like payment of wages and salaries,

payment of electricity and water bills, payment to creditors, meeting current liabilities,

maintenance of enough stock, purchase of raw materials, etc.

7. Financial controls: The finance manager has not only to plan, procure and utilize the

funds but he also has to exercise control over finances. This can be done through many

techniques like ratio analysis, financial forecasting, cost and profit control, etc.

Meaning of hospital:

A medical treatment facility capable of providing inpatient care. It is

appropriately staffed and equipped to provide diagnostic and therapeutic services, as well

as the necessary supporting services required to perform its assigned mission and

functions. A hospital may, in addition, discharge the functions of a clinic.

Definition of hospital

A place for receiving medical or surgical care, usually as an inpatient (resident).

An ill person in the US may be 'in the hospital,' and his ailing UK counterpart would say

he is 'in hospital.'

Financial management in hospital

The financial management is so compulsory for the hospital and healthcare

organization; because the hospitals are growing day by day and they are becoming capital

intensive which requires a lot of investments by mean of equipment Purchasement andoperating expenses. The hospital and other health facilities which are privately running or

it is government based they need a tight and well managed financial department, financial

Management is also one of the most important branch of the hospital as other branches

like operation, administration, logistic and so on .

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We have many hospital in our society which are running and financed by

Government, some are running by voluntary organizations and some

are running and financed by influential and charitable members, so all of these need a

financial management .

A sound hospital financial management system requires skilled and analytical

thinkers for your hospital revenue cycle management as well as processes and tools to

escalate hospital Revenue .

Purpose of financial management in hospital:

Hospital financial management, hospital management must first define or develop

a system and procedures tailored to the organizational structure. System and this

procedure would require the forms, journals, ledgers, ledger and financial lists. Systems

and procedures and forms set out above can still be revised or amended as necessary,

adjusted to the changes that occur. It helped public and private hospitals and health

systems with all phases of the revenue cycle, specializing in cost accounting, cost

analysis, and rate setting. The purpose of this course is to enable participants acquire in-

depth knowledge and skills on how to manage hospitals in a resource limited

environment.

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1.2Objectives of the study:

1. To have an insight into the management of the Srinivasa Hospital

2.To analyze the various sources of finance of the Srinivasa Hospital

3. To analyze the various uses of finance of the Srinivasa Hospital

4. To identify the financial strength and weakness of the company.

5..To give suitable suggestion for improving the financial management.

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1.3Scope of the study:

Financial management is that managerial activity which is concerned with the

planning and controlling of the firm's financial resources.Finacial management is life

blood of the organization. So researcher has made an attempt to analyze and evaluate the

financial management with special reference to Srinivasa Hospital in Kovilpatti.

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1.4Need of the study:

Financial management in hospital is very important or significant because it is

related to funds of Hospital. It guides to finance manager to make optimum use of

hospital funds. Hence there is an imperative need to undertake a study of this nature with

special reference to Srinivasa Hospital to ascertain

Manage the operational and maintenance costs

Taking decisions regarding investment

Set aside the remaining results of operations

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1.4 LIMITATION OF THE STUDY:

The analysis was made with the help of the secondary data collected from the

company.

All the limitations of ratio analysis, common-size statement, comparative

statements, and trend analysis and interpret are applicable to this study.

The period of study is 5 years from 2003-04 to 2007-08.

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2.1Literature review:

This paper launches a 12-part series of articles on financial management of

hospital pharmacies. This series is designed to help hospital pharmacists developexpertise in financial management so that they can keep pace with changing

reimbursement structures and shrinking departmental budgets. The objectives,

responsibilities, and capabilities of the hospital financial department will be reviewed,

and the need for pharmacy directors to develop departmental financial management

systems will be stressed. Methods of collecting financial information and preparing

financial reports will be reviewed, as well as how those reports can be used in managing

the pharmacy. Budgeting techniques will be demonstrated, methods for analyzing

expenses and revenues will be illustrated, and possible cost-containment activities will be

identified. Methods used by hospital administration to control costs of all departments

will be reviewed.

Review

The effect of hospital reimbursement systems on the financial management of

hospitals is briefly discussed, and the organization of hospital financial operations is

reviewed. The implementation of Medicare prospective pricing will change the way in

which hospital finances are managed. Health-care managers will be concerned with the

profitability of product lines, or diagnosis-related groups, in future strategic planning

efforts. The hospital's finance department consists of several traditional areas that exist in

almost all financial organizations. The functions and interactions of these various areas

are discussed in light of previous and current hospital reimbursement strategies. Staffing

of the finance department and the duties of the hospital's chief financial officer are alsodescribed. The prospective pricing system of hospital reimbursement and increasing

pressure from the business community to stem the rising costs of health care will produce

changes in the medical and financial operations of the hospital industry over the next

decade.

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2.2Research methodology:

Research:

Research is an organized systematic database, article, objectives, scientific

enquiry or investigations into specific problems undertaken for the purpose of finding

answer or solution to it. Research provides the needed information that guides managers

make informed decision to successfully deal with problems.

Research design:

The research design used to this project work is analytical in nature. The financial

data collected from the company are used for analysis.

Source of data:

Srinivasa Hospital provided necessary records and report which constituted the

source of secondary data.

Secondary data:

The secondary data already available data. The secondary data are data which

have been already collected and analyzed. The data may either be published data or

unpublished data.

Tools for analysis:

1. Ratio analysis

2. Trend analysis.

3. Common size analysis

4. Comparative statement analysis

RATIO ANALYSIS

A ratio is the process of determining and presenting the relationship of items and

groups of items in the financial statements.

Trend analysis

Trend analysis used for comparing the financial statement of a firm over a

number of year, when the number of year is more than two, trend analysis is more

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appropriate trend analysis involves the calculation of percentage relationship of each item

in the statement that bears to the same item in the base year

2.3Industry profile

A hospital is a health care institution providing patient treatment by specialized

staff and equipment. Hospitals are usually funded by the public sector, by health

organizations (for profit ornonprofit), health insurance companies, orcharities, including

direct charitable donations. Historically, hospitals were often founded and funded by

religious orders or charitable individuals and leaders. Today, hospitals are largely staffed

by professional physicians, surgeons, and nurses, whereas in the past, this work was

usually performed by the founding religious orders or by volunteers. However, there are

various Catholic religious orders, such as the Alexians and the Bon Secours Sisters,

which still focus on hospital ministry today.

There are over 17,000 hospitals in the world In accord with the original meaning

of the word, hospitals were originally "places of hospitality", and this meaning is still

preserved in the names of some institutions such as the Royal Hospital Chelsea,

established in 1681 as a retirement and nursing home for veteran soldiers.

A graphic method of presenting the functional efficiency or evaluation of a mental

hospital has been developed in the form of a Profile. A few tables of statistics have been

developed to point up the picture of facilities, personnel, and operation of a hospital.

Such abbreviated, condensed, pictorial summaries are needed when one tries to

comprehend such a complex phenomenon as a public mental hospital in a unitary view.

The Profile is not presented as anything definitive but as a tentative method of presenting

a diversity of elements in brief compass. It not only helps the evaluation of a given

hospital, but will enable any board or group to compare hospitals and thus make rating

fairer and more comparable. Such a Profile should help a staff, superintendent, and Board

of Trustees to carry a clear picture of the functional adequacy of their hospital in mind

and turn their thinking to rectifying the not acceptable or absent elements in the

Profile.The Profile should, because of its abbreviated, condensed, and graphic nature,

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afford an effective tool for public education with regard to the mental hospitals in the

United States and Canada.

Types

Somepatients go to a hospital just for diagnosis, treatment, or therapy and then

leave ('outpatients') without staying overnight; while others are 'admitted' and stay

overnight or for several days or weeks or months ('inpatients'). Hospitals usually are

distinguished from other types of medical facilities by their ability to admit and care for

inpatients whilst the others often are described as clinics.

General

The best-known type of hospital is the general hospital, which is set up to deal

with many kinds ofdisease and injury, and normally has an emergency department to

deal with immediate and urgent threats to health. Larger cities may have several hospitals

of varying sizes and facilities. Some hospitals, especially in the United States, have their

own ambulance service.

District

A district hospital typically is the major health care facility in its region, with

large numbers of beds forintensive care and long-term care; and specialized facilities for

surgery,plastic surgery,childbirth, bioassay laboratories, and so forth.

Specialized

Types of specialized hospitals include trauma centers, rehabilitation hospitals,

children's hospitals, seniors' (geriatric) hospitals, and hospitals for dealing with specific

medical needs such as psychiatric problems (see psychiatric hospital), certain disease

categories such as cardiac, oncology, or orthopedic problems, and so forth.

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A hospital may be a single building or a number of buildings on a campus. Many

hospitals with pre-twentieth-century origins began as one building and evolved into

campuses. Some hospitals are affiliated with universities for medical research and the

training of medical personnel such as physicians and nurses, often called teaching

hospitals. Worldwide, most hospitals are run on a nonprofit basis by governments or

charities. There are however a few exceptions, e.g. China, where government funding

only constitutes 10% of income of hospitals.

Teaching

A teaching hospital combines assistance to patients with teaching to medical students and

nurses and often is linked to a medical school, nursing school or university.

Clinics

A medical facility smaller than a hospital is generally called a clinic, and often is run by a

government agency for health services or a private partnership of physicians (in nations

where private practice is allowed). Clinics generally provide only outpatient services.

Departments

Hospitals vary widely in the services they offer and therefore, in the departments (or

"wards") they have. They may have acute services such as an emergency department or

specialist trauma centre, burn unit, surgery, orurgent care. These may then be backed up

by more specialist units such as:

Emergency department

Cardiology

Intensive care unit

o Pediatric intensive care unit

o Neonatal intensive care unit

o Cardiovascular intensive care unit

Neurology

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Oncology

Obstetrics and gynecology

Some hospitals will have outpatient departments and some will have chronic treatment

units such as behavioral health services, dentistry, dermatology, psychiatric ward,

rehabilitation services, andphysical therapy.

History

In ancient cultures, religion and medicine were linked. The earliest documentedinstitutions aiming to provide cures were ancient Egyptian temples. In ancient Greece,

temples dedicated to the healer-god Asclepius, known as Asclepieia (Ancient Greek:

sing. Asclepieion, functioned as centers of medical advice, prognosis, and healing. At

these shrines, patients would enter a dream-like state of induced sleep known as

enkoimesis not unlike anesthesia, in which they either received guidance from the deity

in a dream or were cured by surgery.Asclepeia provided carefully controlled spaces

conducive to healing and fulfilled several of the requirements of institutions created for

healing. In the Asclepieion of Epidaurus, three large marble boards dated to 350 BC

preserve the names, case histories, complaints, and cures of about 70 patients who came

to the temple with a problem and shed it there. Some of the surgical cures listed, such as

the opening of an abdominal abscess or the removal of traumatic foreign material, are

realistic enough to have taken place, but with the patient in a state of enkoimesis induced

with the help of soporific substances such as opium.The worship of Asclepius was

adopted by the Romans. Under his Roman name sculapius, he was provided with a

temple (291 BC) on an island in the Tiberin Rome, where similar rites were performed.

Institutions created specifically to care for the ill also appeared early in India. Fa Xian, a

Chinese Buddhist monk who travelled across India ca. 400 CE, recorded in his travelogue

that

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The earliest surviving encyclopedia of medicine in Sanskrit is the Carakasamhita

(Compendium ofCaraka). This text, which describes the building of a hospital is dated

by Dominik Wujastyk of the University College London from the period between 100

BCE and CE150.According to Dr.Wujastyk, the description by Fa Xian is one of the

earliest accounts of a civic hospital system anywhere in the world and, coupled with

Carakas description of how a clinic should be equipped, suggests that India may have

been the first part of the world to have evolved an organized cosmopolitan system of

institutionally-based medical provision.

King Ashoka is said to have founded at least eighteen hospitals ca. 230 B.C., with

physicians and nursing staff, the expense being borne by the royal treasury. Stanley

Finger (2001) in his book, Origins of Neuroscience: A History of Explorations Into BrainFunction, cites an Ashokan edict translated as: "Everywhere King Piyadasi (Asoka)

erected two kinds of hospitals, hospitals for people and hospitals for animals. Where

there were no healing herbs for people and animals, he ordered that they be bought and

planted." However Dominik Wujastyk disputes this, arguing that the edict indicates that

Ashoka built rest houses (for travellers) instead of hospitals, and that this was

misinterpreted due to the reference to medical herbs.

According to the Mahavamsa, the ancient chronicle of Sinhalese royalty, written in the

sixth century A.D., King Pandukabhaya of Sri Lanka (reigned 437 BC to 367 BC) had

lying-in-homes and hospitals (Sivikasotthi-Sala) built in various parts of the country. This

is the earliest documentary evidence we have of institutions specifically dedicated to the

care of the sick anywhere in the world.Mihintale Hospital is the oldest in the world.[Ruins

of ancient hospitals in Sri Lanka are still in existence in Anuradhapura, and Medirigiriya.

The first teaching hospital where students were authorized to practice methodically on

patients under the supervision of physicians as part of their education, was the Academy

of Gundishapurin the Persian Empire. One expert has argued that "to a very large extent,

the credit for the whole hospital system must be given to Persia".

Funding

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In the modern era, hospitals are, broadly, either funded by the government of the

country in which they are situated, or survive financially by competing in the private

sector (a number of hospitals also are still supported by the historical type of charitable or

religious associations).

In the United Kingdom for example, a relatively comprehensive, "free at the point of

delivery" health care system exists, funded by the state. Hospital care is thus relatively

easily available to all legal residents, although free emergency care is available to

anyone, regardless of nationality or status. As hospitals prioritize their limited resources,

there is a tendency for 'waiting lists' for non-crucial treatment in countries with such

systems, as opposed to letting higher-payers get treated first, so sometimes those who can

afford it take out private health care to get treatment more quickly.On the other hand,some countries, including the USA, have in the twentieth century introduced a private-

based, for-profit-approach to providing hospital care, with few state-money supported

'charity' hospitals remaining today.Where for-profit hospitals in such countries admit

uninsured patients in emergency situations (such as during and afterHurricane Katrina in

the USA), they incur direct financial losses, ensuring that there is a clear disincentive to

admit such patients.

As the quality of health care has increasingly become an issue around the world, hospitals

have increasingly had to pay serious attention to this matter. Independent external

assessment of quality is one of the most powerful ways to assess this aspect of health

care, and hospital accreditation is one means by which this is achieved. In many parts of

the world such accreditation is sourced from other countries, a phenomenon known as

international healthcare accreditation, by groups such as Accreditation Canada from

Canada, the Joint Commission from the USA, the Trent Accreditation Scheme from

Great Britain, and Haute Authorit de sant (HAS) from France.

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Buildings

Architecture

Modern hospital buildings are designed to minimize the effort of medical personnel and

the possibility of contamination while maximizing the efficiency of the whole system.

Travel time for personnel within the hospital and the transportation of patients between

units is facilitated and minimized. The building also should be built to accommodate

heavy departments such as radiology and operating rooms while space for special wiring,

plumbing, and waste disposal must be allowed for in the design.

However, the reality is that many hospitals, even those considered 'modern', are the

product of continual and often badly managed growth over decades or even centuries,

with utilitarian new sections added on as needs and finances dictate. As a result, Dutch

architectural historian Cor Wagenaarhas called many hospitals:

"... built catastrophes, anonymous institutional complexes run by vast bureaucracies, and

totally unfit for the purpose they have been designed for ... They are hardly ever

functional, and instead of making patients feel at home, they produce stress and anxiety."

Some newer hospitals now try to re-establish design that takes the patient's psychological

needs into account, such as providing more fresh air, better views and more pleasant

colour schemes. These ideas harken back to the late eighteenth century, when the concept

of providing fresh air and access to the 'healing powers of nature' were first employed by

hospital architects in improving their buildings.

The research of British Medical Association is showing that good hospital design can

reduce patient's recovery time. Exposure to daylight is effective in reducing depression.

Single sex accommodation help ensure that patients are treated in privacy and with

18
http://en.wikipedia.org/w/index.php?title=Cor_Wagenaar&action=edit&redlink=1http://en.wikipedia.org/wiki/British_Medical_Associationhttp://en.wikipedia.org/w/index.php?title=Cor_Wagenaar&action=edit&redlink=1http://en.wikipedia.org/wiki/British_Medical_Association


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dignity. Exposure to nature and hospital gardens is also important - looking out windows

improves patients' moods and reduces blood pressure and stress level. Eliminating long

corridors can reduce nurses' fatigue and stress.

Another ongoing major development is the change from a ward-based system (where

patients are accommodated in communal rooms, separated by movable partitions) to one

in which they are accommodated in individual rooms. The ward-based system has been

described as very efficient, especially for the medical staff, but is considered to be more

stressful for patients and detrimental to their privacy. A major constraint on providing all

patients with their own rooms is however found in the higher cost of building and

operating such a hospital; this causes some hospitals to charge for private rooms.

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3.1RATIO ANALYSIS

Ratio analysis is the process of determining and interpreting numerical

relat ionsh ip between figures o f the f inancial statements. An absolute figure oftendoes not convey much meaning. Generally, it is only in the light of other

information that the significance of a figure is realized.

3.1.1FIXED ASSETS TURNOVER RATIO:

The ratio indicates the extent to which the investments in fixed assets contribute

towards sales. If compared with a previous year. It indicates whether the investment in

fixed assets has been judicious or not the ratio is calculated as follows.

Net sales

Fixed assets turnover ratio = -------------------

Fixed assets

FIXED ASSERTS TURN OVER RATIO ON 2006-07 TO 2010-11

Interpretation and Analysis:

20

YEAR SALES F.A RATIO

2006-07 1967981 527248 3.73

2007-08 2506809 624518 4.01

2008-09 2457913 243146 10.112009-10 4332932 1119088 3.87

2010-11 4604800 1152200 3.99


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The above table and diagram shows the relationship between the fixed assets and

sales. The sale is 5 times more than the fixed assets 2006-07 and 2010-11.It can be

observed that in the year 2010-11 the fixed assets value increased a lot and which shows

that there is an additions made to the fixed assets, similarly the sales was also increased

from 527248 (2006-07) to 1152200 (2010-11).

FIXED ASSERTS TURN OVER RATIO ON 2006-07 TO 2010-11

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3.1.2DEBT-EQUITY RATIO AS ON 2006-07 TO 2010-11

DEBT EQUITY RATIO:

It expresses the relationship between the external equities and internal

equities or the relationship between borrowed funds and owners capital. It is a popular

measure of the long-term financial solvency of a firm. This relationship is shown by the

debt equity ratio. This ratio indicates the relative proportion of debt and equity infinancing the assets of a firm. This ratio is computed by dividing the total debt of the firm

by its equity (i.e.) net worth.

Outsiders funds

Debt equity ratio = ------------------------------

Proprietors funds

22

YEAR DEPTH EQUITY RATIO

2006-07 971365.8 6201981 1.56

2007-08 2789188 6893872 0.4

2008-09 1784139 8735488 0.21

2009-10 2571648

1082972

4 0.24

2010-11 2399773

1036497

2 0.23


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Interpretation and Analysis:

From the above table it is observed that the company maintained long term debt to

equity capital ratio i.e. 2006-07 is 0.64, 1.6, 1.63, 1.67 & 1.66 in the year 2007-08, 2008-

09, 2009-10 & 2010-11 respectively.Hence the company is maintaining its debt position.

The highest ratio the better it is since it would indicate that debts are being collected more

promptly.Higher ratio indicates efficiency in work performance. This indicates there is

proper utilization of available resources and presence of idle capacity.

DEBT-EQUITY RATIO ON 2006-07 TO 2010-11

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3.1.3RETURN ON INVESTMENT:

Meaning:

Return on investment includes all the income you earn on the investment as well

as any profit that results from selling the investment. It can be negative as well as positive

if the sale price plus any income is lower than the purchase price. Return on investment

measures overall effectiveness of Management in generation profits with its available

assets.

EBIT

Return on Investment = -------------------

Total assets

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INFERENCE:

Its observed from above table that the amount of Return on Investment. It

show in the increasing trend .The higher amount of Return On Investment was recorded

in the financial year 2010-11 as 0.17 and the lower amount of Return On Investment

expanses was recorded in the financial year 2006-07 ratio of Return n Investment 0.08.

RETURN ON INVESTMENT ON 2006-07 TO 2010-11

25

YEAR EBIT TOTAL ASSETS RATIO

2006-07 663543 7679543.3 0.08

2007-08

102819

8 9683248.4 0.11

2008-09

119844

6 11405086.4 0.11

2009-10

207765

5 12861561.3 0.16

2010-11

226625

0 12764933 0.17


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26


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3.1.4Surplus/Deficit Ratio:

Meaning:

Cash surplus or deficit is revenue (including grants) minus expense, minus net

acquisition of nonfinancial assets.The operating results before interest and depreciation,

or gross surplus, are calculated as a percentage of total operating revenue. The gross

surplus ratio shows the gross surplus as a percentage of the entities turnover. If the

percentage is high this could be interpreted as a sign that the entity is operating

efficiently. This cash surplus or deficit is closest to the earlier overall budget balance

S/D

Surplus/Deficit Ratio = ------------------- * 100

INCOME

YEAR SURPLUS INCOME RATIO

2006-07 550263.4 1967981 27.96

2007-08 901062.6 2506809 35.94

2008-09 1084771 2457913 44.13

2009-10 1977372 4332932 45.642010-11 2152620 4604800 46.74

INFERENCE:

Its observed from above table that the amount of Surplus Ratio in the year of

2006-07 to 2010-11. The higher amount of Surplus Ratio was recorded in the financial

year 2010-11 as 46.74 and the lower amount of Surplus Ratio was recorded in the

financial year 2006-07 ratio of Surplus on 0.08.

SURPLUS/DEFICIT RATIO ON 2006-07 TO 2010-11

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3.2 COMPARATIVE STATEMENT ANALYSISComparative income statement:

The income statement discloses net profit or net loss on account of

operations. A comparative income statement will show the absolute figures for two or

more periods. The absolute change from one period to another and if desired. The change

in terms of percentages. Since, the figures for two or more periods are shown side by

side; the reader can quickly ascertain whether sales have increased or decreased, whether

cost of sales has increased or decreased etc.

3.2.1COMPARATIVE STATEMENT OF WARD INCOME 2006-07 to 2010-11

Analysis of ward income

% %

YEAR AMOUNT INCREASE DECREASE INCRASE DECREASE

2006-07 1229160 - - -

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2007-08 1872810 643650 - 52.36

2008-09 1820700 - 52110 2.78

2009-10 3670258 1849558 - 101.28

2010-11 3867200 196942 - 5.37

Total 12460128 2690150 521110 159.01 2.78

INFERENCE:

Its observed from above table that the amount of ward income in the year

2006-07 to 2010-11.The higher amount of ward income was recorded in the financial

year 2010-2011 as 3867200 and the lower amount of ward income was recorded in the

financial year 2006-07 1229160.The number of inpatient should be increase in the year of

2010-11 and the ward income is increased.

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3.2.2 COMPARATIVE STATEMENT OF OP INCOME 2006-07 to 2010-11

30

analysis of OP income


2006-07 185580 - - - -

2007-08 173580 - 12000 - 6.47

2008-09 156080 - 17500 - 10.08

2009-10 170820 14740 - 9.44 -

2010-11 189000 18180 - 10.64 -

Total 875060 32920 29500 20.08 16.55


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INFERENCE:

Its highlighted from above table that the amount of Outpatient income the year

2006-07 to 2010-11.The higher amount of Outpatient income was recorded in the

financial year 2010-2011 as 189000 and the lower amount of Outpatient income was

recorded in the financial year 2008-09 RS.156080.The number of outpatient should be

increase in the year of 2010-11 and the outpatient income is increased.

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3.2.3 COMPARATIVE STATEMENT OF SCAN INCOME 2006-07 to 2010-11

Analysis of Scan income

% %


2006-07 185210 - - - -

2007-08 148507 - 36703 - 19.82

2008-09 110500 - 38007 - 25.59

2009-10 151250 40750 - 36.88 -

2010-11 167500 16250 - 10.74 -Total 762967 57000 74710 47.62 45.41

INFERENCE:

Its understand from above table that the amount of Scan income the

year 2006-07 to 2010-11.The higher amount of Scan income was recorded in the

financial year 2006-2007 as 185210 and the lower amount of Scan income was recorded

in the financial year 2008-09 RS.110500.

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3.2.4 COMPARATIVE STATEMENT AMBULANCE INCOME 2006-07 TO 2010-

11

33

Analysis of AMBULANCE INCOME

% %


2006-07 289980 - - - -

2007-08 218212 - 71768 - 24.742008-09 233070 14858 - 6.8 -

2009-10 288181 55111 - 23.64 -

2010-11 326800 38619 - 13.4 -

Total 1356243 108588 71768 43.84 24.74


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INFERENCE:

Its crystal from above table that the amount of Ambulance income the

year 2006-07 to 2010-11.The higher amount of Ambulance income was recorded in the

financial year 2010-2011 as 326800 and the lower amount of Ambulance income was

recorded in the financial year 2007-08 RS.218212.

3.2.5COMPARATIVE STATEMENT OF BUILDING RENT 2006-07 to 2010-11

34

Analysis of BUILDING RENT

% %


2006-07 40800 - - - -

2007-08 40800 - - - -

2008-09 40800 - - - -

2009-10 50800 10000 - 24.51 -

2010-11 52000 12000 - 2.36 -Total 225200 22000 - 26.87 -


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INFERENCE:

Its understood from above table shows that the amount of Building rent

income the year 2006-07 to 2010-11.The higher amount of Building rent income was

recorded in the financial year 2010-11 RS.52800 and the lower amount of Building rent

income was recorded in the financial year 2006-2007 as 40800.The year 2010-11

building rent should be increased so building rent is high.

3.2.6 COMPARATIVE STATEMENT OF PAY CHARGES 2006-07 TO 2010-11

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INFERENCE:

Its observed from above table that the amount of Charges expanses the

year 2006-07 to 2010-11.The higher amount of Charges expanses was recorded in the

financial year 2010-11 as 731380 and the lower amount of Charges expanses was

recorded in the financial year 2007-08 RS.396492.The bank, EB, and telephone charges

should be increased in the year of 2010-11 so the charges of expanses is high.

36

Analysis of CHARGES

% %


2006-07 520323.6 - - - -

2007-08 396492 - 123851.6 23.8 23.82008-09 504736 108244 - 27.3 -

2009-10 694634 189898 - 37.86 -

2010-11 731380 36746 - 5.29 -

Total 2847566 334888 123851.6 94.25 23.8


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3.2.7 COMPARATIVE STATEMENT OF SALARY &WAGES 2006-07 TO 2010-

11

INFERENCE:

The above table that the amount of SALARY&WAGES the year 2006-

07 to 2010-11..The higher amount of SALARY&WAGES was recorded in the financial

year 2010-11 as 1145200 and the lower amount of SALARY&WAGES was recorded in

the financial year 2008-009 RS.239646.The hospital management should be increase the

staff bonus and salary so the salary expanses is higher.

3.2.8COMPARATIVE OF HOSPITAL EXPANSES 2006-07 to 2010-11

37

Analysis of SALARY&WAGES% %


2006-07 527248 - - - -

2007-08 610330 83082 - 15.75

2008-09 239646 - 370684 - 60.74

2009-10 112886 - 126760 - 52.89

2010-11 1145200 1032314 91.14

Total 2635310 1115396 497444 106.89 113.63


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INFERENCE:

Its observed from above table that the amount of HOSPITAL

EXPANSES the year 2006-07 to 2010-11.The higher amount of HOSPITAL

EXPANSES was recorded in the financial year 2008-09 as 235734 and the lower amountof HOSPITAL EXPANSES was recorded in the financial year 2006-07 RS.63504.The

hospital stationary, miscellaneous expanses should be increased in the year of 2008-09

the hospital expanses should be higher.

38

Analysis of HOSPITAL EXPANSES

% %


2006-07 63504 - - - -

2007-08 214337.7 150833.7 - 237.51 -

2008-09 235734 5603.7 - 2.61 -

2009-10 128679 - 107058 - 45.41

2010-11 136900 8221 - 6.39 -

Total 779154.7 164658.4 107058 246.51 45.41


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3.2.9COMPARATIVE STATEMENT OF MAINTANENCE EXPANSES 2006-07 to

2010-11

INFERENCE:

Its observed from above table that the amount of MAINTANENCE

expanses the year 2006-07 to 2010-11. The higher amount of MAINTANENCE expanses

was recorded in the financial year 2010-11 as 332500 and the lower amount of

MAINTANENCE expanses was recorded in the financial year 2008-09

39

Analysis of MAINTANENCE expanses

% %


2006-07 225018 - - - -

2007-08 319255.6 94237.6 - 41.88 -

2008-09 193655.9 - 125599.7 - 39.34

2009-10 316775.6 123119.7 - 63.57 -

2010-11 332500 15724.4 - 4.96 -

1387205 233081.7 125599.7 110.41 39.34


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RS.193655.90.The hospital should be established and maintenance in the year of 2010-11

so the maintenance expanses should be higher

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3.2.10 COMPARATIVE STATEMENT OF TAX EXPANSES 2006-07 to 2010-11

INFERENCE:

Its observed from above table that the amount of Taxes expanses the

year 2006-07 to 2010-11.The higher amount of Taxes expanses was recorded in the

41

analysis of Taxes Expanses % %


2006-07 81503 - - - -

2007-08 65291 - 16212 - 19.89

2008-09 58370 - 6921 - 10.6

2009-10 102587 44217 - 75.75

2010-11 106200 3613 - 3.52

Total 413951 47830 23133 79.27 30.49


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financial year 2010-11 as 106200 and the lower amount of Taxes expanses was recorded

in the financial year 2008-09 RS.58370.the year of 2010-11 the hospital tax should be

increased so the tax expanse is higher.

3.2.11 COMPARATIVE STATEMENT OF EXCESS OVER INCOME 2006-07 to

2010-11

42

Analysis of Excess Income

% %YEAR AMOUNT INCREASE DECREASE INCRASE DECREASE

2006-07 550263.5 - - - -

2007-08 901062.6 350799 - 63.75 -

2008-09 1084771 183708.4 - 20.83 -

2009-10 1977372 892601 - 82.28 -

2010-11 2152620 175248 - 8.86 -

Total 6666089 1602356 - 175.72 -


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INFERENCE:

Its observed from above table that the amount of Taxes expanses the

year 2006-07 to 2010-11. It The higher amount of Taxes expanses was recorded in the

financial year 2010-11 as 2152620 and the lower amount of Taxes expanses was

recorded in the financial year 2006-07 RS.550263.5.

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3.3COMMON SIZE STATEMENT ANALYSIS

Common-size financial statement:

Common-size financial statement are those in which figures reported are

converted into percentages to some common base in the income statement the sales figure

is assumed to be 100 and all figures are expressed as a percentage of sales. Similarly, in

the balance sheet, the total of assets or liabilities is taken as 100 and all the figures are

expressed as a percentage of this total.

3.3.1COMMON SIZE STATEMENT OF INCOME 2006-07 to 2010-11

SRINIVASA HOSPITAL at KOVILPATTI

44

analysis of source

Year 2006-07 2007-08 2008-09 2009-10 2010-11

Ward income 62.45 74.92 74.07 84.7 83.98

op income 9.42 6.94 6.35 6.65 4.1

Scan income 9.41 5.94 4.49 3.45 3.63

Building rent 2.07 1.63 1.66 3.94 1.13

Ambulance 14.73 8.73 9.48 1.17 7.1Other income 1.89 1.82 3.66 0.04 -

Bank income - - 0.27 - -

LIC income - - - - 0.05

TOTAL 100 100 100 100 100


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Inference:

The common size income statement for the year 2010 to 2011 reveals the

following. The ward income figure increased on 83.98 in the year 2006-07. There is

heavy decrease in the income. In the year 2006-07 ward income decreased on62.45. The

OP income figure increased on 9.42 in the year of 2006-07. There is heavy decrease in

the OP income. In the year 2010-11 OP income decreased on4.10. The WARD income

figure increased on 9.41 in the year of 2006-07. There is heavy decrease in the WARD

income. In the year 2009-10 WARD income decreased on3.45. The BUILDING RENT

income figure increased on 3.94 in the year of 2009-10. There is heavy decrease in the

BUILDING RENT income. In the year 2010-11 BUILDING RENT income decreased

on1.13.The AMBULANCE income figure increased on 14.73 in the year of 2006-07.

There is heavy decrease in the AMBULANCE income. In the year 2009-10

AMBULANCE income decreased on1.17. The SCAN income figure increased on 9.41 in

the year of 2006-07. There is heavy decrease in the SCAN income. In the year 2009-10

SCAN income decreased on3.45. The OTHER income figure increased on 1.89 in the

year of 2006-07. There is heavy decrease in the OTHER income. In the year 2009-10

OTHER income decreased on0.4.

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3.3.2 COMMON SIZE STATEMENT OF EXPANTITURE 2006-07 to 2010-11

SRINIVASA HOSPITAL at KOVILPATTI

Common-size financial statement:

Common-size financial statement are those in which figures reported are

converted into percentages to some common base in the income statement the sales figure

is assumed to be 100 and all figures are expressed as a percentage of sales. Similarly, in

the balance sheet, the total of assets or liabilities is taken as 100 and all the figures are

expressed as a percentage of this total.

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Inference:

The common size expenditure statement for the year 2010 to 2011 reveals the

following. The charges expanses figure increased on 26.43 in the year of 2006-07. There

is heavy decrease in the expenditure. In the year 2008-09 charge expenses decreased

on15.81. The salary expanses figure increased on 26.79 in the year of 2006-07. There is

heavy decrease in the expanse. In the year 2007-08 Salary expenses decreased on 9.74.

The Hospital expanses figure increased on 9.6 in the year of 2007-08. There is heavy

decrease in the expanse. In the year 2010-11 Hospital expenses decreased on 2.97. The

Maintenance expanses figure increased on 12.74 in the year of 2008-09. There is heavy

decrease in the expanse. In the year 2010-11 Maintenance expenses decreased on 7.31.

The Tax expanses figure increased on 4.14 in the year of 2006-07. There is heavy

decrease in the expanse. In the year 2009-10 Tax expenses decreased on 2.3. The Over

income expanses figure increased on 46.74 in the year of 2010-11. There is heavy

decrease in the expanse. In the year 2006-07 over income expenses decreased on 27.96.

47

Analysis of Uses

year 2006-07

2007-

08

2008-

09

2009-

10

2010-

11

charges 26.43 26.25 15.81 15.88 16.03

Salary,Wages 26.79 9.74 24.32 24.86 25.68Hos.exp 3.22 9.6 8.55 2.97 2.96

Main.Exp 11.43 7.89 12.74 7.22 7.31

Taxes 4.14 2.37 2.32 2.3 2.36

over income 27.96 44.13 35.94 46.74 46.64

Total 100 100 100 100 100


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3.4TREND ANALYSIS STATEMENT OF SRINIVASA HOSPITAL

at KOVILPATTI as on 2006-07 TO 2010-11

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3.4.1Trend analysis:

Meaning:

Trend analysisis the process of analyzing financial statements of a company for

any continuing relationship. Generally, an analysis is made to find out what direction a

concern is going, how rapidly, and whether there are enough resources to complete

proposed projects. Financial statements of some years will be taken for comparative

analysis. Figures can each item are compared to base year and find out the trend.

Trend analysis

year

Net

sales(x) Deviation(y)

y

2 xy Trend

2007 1967981 -2 -4 -3935962 17541352008 2506809 -1 -1 -2506809 -3925674

2009 2457913 0 0 0 2457913

2010 4332932 1 1 4332932 10273848

2011 4604800 2 4 9209600 17373609

Total 15870435 0

1

0 7099761 27933831

Deviation=midyear (2009)-2007= -2

X2= -2^2= -4

Inference:

By taking 2006-07 as base year (100%) the sales, total income, total expenditure,

and net profit during the study period were analysis by taking trend as a tool. The above

table shows the movement of variables during the study period. The entire variable shows

the lower trend during the 2010-11.

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50


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4.1FINDINGS

The company Fixed Assets Turnover Ratio is high in year 2010-11 as

compared to year 2006-07 i.e. 3.73 to 3.99 respectively. High ratio indicates

efficiency in work performance.

The sale is 4 times more than the fixed assets 2006-07 and 2007-08. It is more

than 3 times during 2009-10 and 2010-2011. It is more than 2 times during

2007-08.

Debt Equity Ratio is decreased from 1.56 to 0.23due todecreased in long term debts by company.

In all the years the debt equity is more, when compared with borrowings.

Hence the hospitals is maintaining its debt position.

In all the years the debt equity is more, when compared with borrowings.

Hence the company is maintaining its debt position.

Return on investment measures overall effectiveness of Management in

generation profits with its available assets. Return on investment ratio is

decreased from 2001-02 to 2006-07 i.e. 23.81% to 19.25%.

The higher amount of Surplus Ratio was recorded in the financial year 2010-

11 as 46.74 and the lower amount of Surplus Ratio was recorded in the

financial year 2006-07 ratio of Surplus on 0.08.

The higher amount of ward income was recorded in the financial year 2010-

2011 as 3867200 and the lower amount of ward income was recorded in the

financial year 2006-07 1229160.

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The higher amount of Outpatient income was recorded in the financial year

2010-2011 as 189000 and the lower amount of Outpatient income was

recorded in the financial year 2008-09 RS.156080.

The higher amount of Scan income was recorded in the financial year 2006-

2007 as 185210 and the lower amount of Scan income was recorded in the

financial year 2008-09 RS.110500.

Ambulance income was recorded in the financial year 2010-2011 as 326800

and the lower amount of Ambulance income was recorded in the financial

year 2007-08 RS.218212.

Building rent income was recorded in the financial year 2010-11 RS.52800

and the lower amount of Building rent income was recorded in the financial

year 2006-2007 as 40800.

Charges expanses was recorded in the financial year 2010-11 as 731380 and

the lower amount of Charges expanses was recorded in the financial year2007-08 RS.396492

SALARY&WAGES was recorded in the financial year 2010-11 as 1145200

and the lower amount of SALARY&WAGES was recorded in the financial

year 2008-009 RS.239646.

HOSPITAL EXPANSES was recorded in the financial year 2008-09 as

235734 and the lower amount of HOSPITAL EXPANSES was recorded in thefinancial year 2006-07 RS.63504.

MAINTANENCE expanses was recorded in the financial year 2010-11 as

332500 and the lower amount of MAINTANENCE expanses was recorded in

the financial year 2008-09 RS.193655.90.

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Taxes expanses was recorded in the financial year 2010-11 as 2152620 and

the lower amount of Taxes expanses was recorded in the financial year 2006-

07 RS.550263.5.

4.2SUGGESTION:

The hospital profit over the years has been decreasing when compared to

previous years and even it incurred loss in the last year. The hospital must

increase the profit in future. The hospital must take steps to increase the profit

level.

Fixed asset of the hospital has increased and even though they are not

utilizing the enhanced technology to increase sales. So the hospital

management should take initiative steps for the proper utilization of the

resources.

The hospital must find out the reasons for the increase in hospital expanses

and must take appropriate measures.

The Management must also study the service position and it also find the

demand prevailing in the service for the patients and thus this will guide them

to enhance their profit volume.

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4.3 CONCLUSION:-

On studying the financial performance of Srinivasa Hospital at Kovilpatti. for a

period of five years from 2006-07 to 2010-11, the study reveals that the financial

performance is better. Srinivasa Hospital at Kovilpatti has been able to maintain optimal

finance positioning. Despite price drops in various treatments, the hospital has been able

to maintain and grow its service facilities to make strong technology, contributing to the

strong financial position of the company. The hospital was able to meet its entire

requirements for capital expenditures and higher level of working capital commitment

with higher volume of operations and from its operating cash flows. Present scenario of

hospital indicates the need for more technology even with the cause of lower production

facilities. The hospital should now give more importance to patients health because it

provides good services realization but also profit benefits.

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5.1 BIBLIOGRAPHY

Annual Reports Of SRINIVASA HOSPITAL

T.S Reddy and Y. Hariprasad Reddy, Financial management, New Delhi: Tata

Mc Graw hill Publishing company Ltd., 1999, 3rd edition

M.A Sahaf Management and Accounting 4th Edition, Tata McGraw Hill

Publishing Company Ltd, 5th Reprint - 2006 - New Delhi.

IM .Pandey, Financial Management 8th Edition, Vikas Publishing house Pvt

Ltd, 6th Reprint -2006- New Delhi.

R.K. Sharma & S.K. Gupta, Financial Management

R.P. Rustagi, Financial Management

introduction moorthi

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