Omega Health Foundation

Omega Health Foundation
Trinette M. Landry
October 11, 2010
Instructor: Moses Padilla

Omega Health Foundation
When doing a financial analysis of a business understanding the principles of finance and how, they relate to a certain company is important.   Omega Health Foundation is a complex business with two hospitals, Omega and Able Memorial, plus a number of related medical service providers.   All of the related entities are nonprofit with the exception of Omega Medical Management, INC (Cleverly & Cameron, 2007).   Within this paper I will explain the principles of finance, compare and contrast net income and cash flow, compare and contrast market value and book value, address weaknesses and strengths, and recommendations for Omega Health Foundation.    

Principles of Finance
Understanding the principles of accounting is a critical first step in understanding financial statements.   However, the average reader may not be able to understand the format and language of financial statements.   In finance, there are four basic principles {sic}:   the balance sheet, statement of revenues and expenses, statement of cash flows, and statement of changes in fund balances or net assets.   First, “the balance sheet and statement of revenues and expenses are more widely published and used than the other two statements.   Understanding them enables a reader to use the other two financial statements and financial information in general” (Cleverly, Essentials of Health Care Finance, p. 164).   The balance sheet essentially explains assets and liabilities that indicate the net assets of the organization at the moment of reporting.   The formula most recognized when working with a balance sheet is
Assets = Liabilities + Stockholders’ equity
Second, the revenues and expenses statement or income statement that is better than the balance sheet and reports profit (or loss).   Because it represents the wealth of the organization in its ability to pay for future and...