Reducing the Risk of Foodborne Illnesses Research (Essay Sample)

The Relationship between Finance and Accounting
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Accounting and finance are closely related but they are not the same thing. Accounting is the complete, concise, accurate, and systematic analysis, determination, recording, measuring, classification, verifying, summarizing, interpreting, reporting and communication of financial information (Crompton, 2015). This systematic process is regulated and guided by the application of the Generally Accepted Accounting Principles (GAAP).Accounting basically entails bookkeeping, measuring and maintaining the financial aspects of a firm. It encompasses preparation of financial statements.  McLaney (2005) elaborates finance as the procedures entailing financial decision making in the organisation in regards to given business investments and their consequent resourcing. Finance encompasses the creation, management and expertise in investments, money, capital, banking, credit, and assets and liabilities. Finance has three main classes namely; corporate, personal, and public finance hinged on ownership and scope. Finance mainly concerns money and the markets. This paper explains further the connection accounting and finance and how they operate to determine financial viability within a healthcare facility.
Accounting provides the raw data for finance to utilise for financial planning. Finance thus is a future-oriented aspect of the business that utilises past data in accounting for future planning and decision-making. Kajanova (2006) explains that insight of past events from accounting reflect to the future, thus accurate accounting information on the past is crucial for business finance. Accounting discloses and accounts for financial reports that include income statement, cash flow statement, statement of financial position and the statement of retained earnings. These provide an outlook and a reflection of the changes in financial position including financing and utilization of resources and finances. These accounting information measure the financial strength, performance, and the liquidity of an organisation. Finance depends on accounting information to counter uncertainties and risks and to also sustain future financial viability. Typically, finance begins after the accounting process concludes.
Both accounting and finance deal with the management of the assets of the organisation. However, they contrast in their decision-making and in their treatment of funds. Lanceera (2010) explains that finance treats income and expenses on cash-flow basis implying recognition for income when there is actual receipt or influx of cash while the expense is acknowledged only when there is a cash outflow. For accounting, income and expenditures are treated on accrual terms. This means the expenditures are acknowledged when incurred not when paid while revenue is recognised on point of sale now when collected.
Financial viability is the ability of an entity to continue to achieve its operating objectives and fulfil its mission over the long term.it is the ability of a company to generate sufficient revenue and income to fulfil the financial responsibilities as well as its liabilities and still sustain its optimal operational service levels. Despite their contrasts, both are vital in establishing financial viability of the firm. In a healthcare setting, financial viability is basically the facility’s capacity to source and sustain revenue that exceeds the expenses. Many financial viability metrics are set standard accounting policies .Comprehension of the operating areas of the organization contribute to the whole scorecard and is enabled through the accounting records that aid managers and other stakeholders. Financial viability is crucial in monitoring and reporting financial performance of the company as well as fostering the role of the administrators. Healthcare reports indicate the financial state of the facility.
Ratios are commonly used in assessing financial viability. These include leverage, efficiency/activity, liquidity and profitability ratios. The profitability ratios assess the return on the assets, the net profit, return on equity and the return on investments. They are applied as yardsticks for comparing performance in the industry. The liquidity ratios which include the quick ratio and the working capital ratio calculate the available liquid assets to meet the financial obligations. They give a wide scope and summary of the financial capabilities of the facility or organisation in regards to liquidity. The leverage ratios depict the overall solvency of the firm as well as the dependency of the firm on debts. They are the debt-to-equity and debt-to-assets ratios .The activity ratios analyse the firm’s capacity to effectively utilise its assets and manage its liabilities.  They can measure the repayment of liabilities, , the quantity and utilisation of equity the turnover of receivables, and the general use of inventory and machinery.
The healthcare industry is highly dynamic thus must always determine and analyse the financial viability of their organization. Otherwise, they are unable to remain financially competitive and perfection of care provided. .For instance, exercise and application of the Obamacare greatly changed the health care sector. Brumley ( 2017) discusses that these major changes including the commencement of Medicare’s billing and coding system and the Electronic Medical recording(EMR) make it crucial for health care facilities to, now more than ever, have accounting and finance expertise.
They must consider; increase in costs, prices of the providers, taxes, aging population, dynamic medical technology, wastes, unhealthy lifestyles and health risk factors .They are contributory factor that affect the financial viability of the organisation. These shifts and dynamism complicate their ability to create substantial resources to cater for all operational bills and still have excess after paying the expenses. There is always an acquisition of utilities, assets, supplies, equipment among other operational and capital assets in every industry. Both accounting and finance aid in assessing...