Costs are evaluated very closely by all levels of health care administrators

Costs are evaluated very closely by all levels of health care administrators. Costs are broken down into different
categories, such as direct costs versus indirect costs, and fixed costs versus variable costs (Finkler, Smith, &
Calabrese, 2020). You will examine these types of costs and learn analytical methods such as break-even analyses
and cost allocation methodologies. These methodologies explore the relationship between volume and cost and
demonstrate why volume plays an important role in the planning process.
For this assessment, you will research how costs are allocated from overhead departments to revenue-generating
departments. You will conduct independent research on cost allocation methodologies in addition to using the
materials provided in the text. You will also consider the steps involved in preparing a cost-benefit analysis (CBA)
when deciding to purchase a capital item such as an MRI machine.
The balance sheet, activity statement (also known as an income statement), and statement of cash flows are three of
the most common types of financial statements that organizations prepare. You can think of balance sheets as a
picture of the financial position of an organization at a given period in time—for example, as of December 31, 20xx.
On the other hand, an activity statement or income statement will show the financial position of an organization over
a longer period of time—for example, an entire month, quarter, or year (Finkler, Smith, & Calabrese, 2020).
You will explore these types of statements and apply your new knowledge to the health care administration field.
You will analyze specific financial statements and think about the financial health of an organization based on the
statements provided. You will have several opportunities to practice your analytical skills within this assessment by
exploring the concept of ratio analysis. Ratio analysis is one more way that both internal and external stakeholders
can increase understanding of the financial position of an organization. Ratio analysis compares financial statement
data to provide another view that may then be benchmarked or compared to other organizations. Some common
ratio types include common size ratios, liquidity ratios, asset turnover ratios, and leverage or coverage ratios (Finkler,
Smith, & Calabrese, 2020).
Additionally, it is important to support your analysis with reference to relevant literature. While it is appropriate to
use your textbook as part of that support, your paper should reference at least three outside articles in addition to
your textbook