...in regard to sales over the financial year. Gross profit percentage of sales: Gross profit Sales This is the measurement of the profit made by SIGnature created by selling their services higher than they buy them. This calculation shows that for every £1 of sales, SIGnature are making a gross profit of 58.63p. This is a positive figure as it shows that the company are gaining a profit from their services which is what they would aim to do and therefore the business should aim to increase their gross profit percentage of sales. Due to SIGnature being a new business, this implies good performance as they are gaining a profit from their services although it is only half of the figure gained from sales. The profit may be low because SIGnature may need to be putting the money created from sales back in to the business in order to keep it running the way it is. To increase this gross profit percentage, SIGnature could potentially attempt to decrease their outflow as they would then not have to put as much money back in to the business. If the gross profit is low because of cost of materials, SIGnature may find it hard to improve this percentage as they need the materials to produce their services. Net profit percentage of sales: This is the measurement of the profit made by SIGnature after they have paid their expenses. This calculation shows that after paying their expenses, SIGnature has made a profit of 2.31p. This figure, although positive, needs to...
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...MEMO To: Partner, Eagle Construction Corporation (EC) From: CPA, Audit Senior Re: EC Draft Audit Plan Analysis of New Accounting Issues Patent Foundation Process I - “[An engineer inspector] expressed concerns regarding the quality of the foundation process in a letter sent to EC. To date in the US, EC has only built single unit projects that did not use the process.” G - An intangible asset shall be recognised if, and only if: (a) it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and (b) the cost of the asset can be measured reliably. R - Risk - Procedures- Hire patent evaluator to determine economic benefit. Inventory Valuation I - Due to the “Doing What You Do” Program, “[a manager] incorrectly authorized the purchase of $900,000 of construction project materials as a result of misunderstanding a submitted purchase request. To make matters worse, the price of these particular construction project materials has recently declined 25% due to increased overseas competition.” G - Inventory is valued at the lower of cost or market value. The inventory is being held at cost, however, due to the increased competition, inventory value has decreased. The inventory should be valued at the market because it is the lowest value, therefore this condition is not met. R - Inventory should be written down by 25%, or $225,000 due to the exchange rate decline. However, management will be reluctant...
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...Financial Management in Non-profit Organizations and How It Compares to For-Profits Organizations are usually classified as either non-profit or for-profit. Business corporations are organized for-profit. While non-profits usually include associations, charities, and other voluntary organizations formed to further cultural, educational, religious, or public service objectives. Non-profits and for-profits do have some things in common. Both types of organizations attract individuals focused on maximizing income, minimizing expenses, and reaching their goals. While there are many similarities, non-profits and for-profits have many differences. The most fundamental difference between nonprofit and for-profit organizations is the reason they exist. A non-profit organization exists to provide a particular service to a community, while a for-profit organization exists primarily to generate a profit for the company’s owners and shareholders. A non-profit organization channels all of their income into services and programs aimed at their mission compared to for-profit organizations that distribute profits between owners, employees, shareholders and the business itself (Bottiglieri, Conway, & Kroleski, 2011). Financial management for non-profit organizations is similar to for-profit organizations in many ways however key differences shift the focus of a nonprofit manager. These differences include organizational structure, ownership, distribution of profits, generating revenue and...
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...Profit Versus Not-for-Profit Hospitals In Partial Fulfillment of the Requirements for Health Services Systems HSM 541 Blaise X. Schmidt DeVry University Keller Graduate School of Management September 2012 1.0 Purpose The purpose of this paper is to conduct a comparative analysis between for-profit hospitals and not-for-profit hospital. It will discuss the characteristics of each as well as factors affecting the operations of both systems. Additionally, it discusses potential areas of improvement and some of the challenges associated with each relative to finance and operations. 2.0 Comparing Not-for-Profit and For-Profit Hospitals Not-for-profit hospitals are organized under the Section 501 (c)(3) of the Internal Revenue Service (IRS) tax code, and as such, are exempt from federal and state taxes and generally from local property and other taxes. Not-for-profit hospitals also have access to tax-exempt bond financing and have tax-deductible status for gifts and contributions (Barton, 2010). For-profit hospitals do not have this luxury. Public or private hospitals can be classified as non-profit. Non-profits include a majority of the hospitals in the US. The two types of hospitals differ mainly in regulatory rules. Not-for-profit hospitals do not need to pay property, sales, or income taxes. For-profit hospitals do. Despite these differences, the two types of ownerships have been becoming more and more similar and many hospitals...
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...for-profit and not-for profit social enterprise? Social enterprise are businesses that deal with the social problems, communities issues, people’s life chances and the environment. More over, making the world a better place is a significant part of what social enterprise do. A social enterprise also know their aims and purpose of its business clearly. Most of its income were bring in through selling goods or services. Besides, it will also have clear rules about what to do with its profits, reinvesting for the enterprise’s further “social mission”. Social enterprise can also be separated into two categories which are both for-profit and not-for profit in form. In our general mindset, for-profit enterprise always try to maximise the returns for the investors, while not-for profit companies will usually serve to public good. The biggest difference between a for-profit and not-for profit social enterprise is that the for-profit enterprise has a more attracting capital compare to not-for profit enterprise. Whereas the not-for profit enterprise usually requires certain ongoing fundraising efforts. As in detailed, a business or organisation which set its primary goal is making a profit are so called for-profit enterprise. Nowadays for-profit enterprise are more preferably by most companies because they are focusing on making profit. Does anyone who's not interested in money? Therefore for-profit enterprise is more attractive than not-for profit companies. A for-profit enterprise...
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...Non-Profit to Profit Making • Tasha Garrison HSA 505: Health Care Planning and Marketing Dr. Wendy Whitner October 30, 2011 Describe the external and internal factors that influence the executive team’s decision making and specify which might be most instrumental in making the decision to become a for-profit entity. Why do you think so? In communities around the nation, many not-for-profit hospitals are struggling to stay afloat. Rising costs, a heavy patient load and outdated equipment make some simply not economically viable. For-profit medical groups are often stepping in and buying these hospitals. While some community leaders are relieved that the hospitals are being saved, others worry that it will be at a cost to the economically disadvantaged in the community. With more hospitals on the auction block every day, the effect of this change is likely to become clear in the coming months and years. There are several factors that contribute to an executive team deciding to become a for profit organization. The most common reason is financial. Both internal and external factors can also influence an executive team’s decision to become a for profit entity. Some of the internal factors are employee turnover or employee relations issues, dated or obsolete facilities, and healthcare services that may be out of line with market demand. The external factors that contribute to...
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...care organization and a for-profit health care organization of your choosing. Answer the following: Summarize the types of services provided, clientele served, and provider groups involved. Compare and contrast the strengths and weaknesses of each organization from patient, provider, administrator, and third-party payer perspectives. Provide at least 2 suggestions for each organization to minimize the identified weaknesses. Summarize which organization you would rather be part of, using rationale. Abstract There are many differences that for-profit and not-for-profit organizations have between one another. Research has been conducted on one not-for-profit organization (VA hospital) in a for-profit organization (Baptist Medical Center) and the strengths and weaknesses from a provider’s and patient’s perspective in which organization would be a better choice to be part of. Not-for-profit hospitals are recognized for their charitable intentions. Not-for-profit hospitals have a habit of being larger and also have a tendency to be training hospitals. The earnings that not-for-profit hospitals receive are reinvested to enhance the quality care that is offered at these hospitals. Their earnings are also invested into community programs, which in turn can provide little to no fee to those individuals who are considered to be low income families and also maybe uninsured for the services of these programs. The purpose of not-for-profit hospitals is to assist healthcare...
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...ReadingNote that the reader might best be served to first read the document Introduction to Organizations to understand the overall general nature of all organizations. As noted in that document, today's leaders are faced with continual change in their organizations. Consequently, today's leaders should have a strong sense of what their organizations are about. This document will accomplish that for nonprofit leaders. An organization is a collection of resources arranged to accomplish an overall goal. The purpose of a nonprofit organization is to meet one or more needs in a community. Each nonprofit describes its overall purpose in a mission statement. (Very simply put, the word "nonprofit" means an organization that does not distribute a profit.) Typical types of nonprofit services are advocacy, arts, civic, cultural, education, health and human service. Nonprofits range in size from extremely large (e.g., Red Cross, large hospitals, etc.) to...
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...everyday aspects of the corporation being ran with precision. So what happens when an organization is not ran financially like a corporation yet deals with almost the same kind of aspects? A non-profit organization can be one of the trickiest functions of business as well as be the hardest type to run on the grounds of the underhandedness that it can usually entail. While it may not come with the great financial payday, running a successful non-profit often requires twice the effort, time that it would take, as well as encouragement to run a successful multi-platform business or corporation. Non-profit organizations are for people who are passionate about a specific cause along with willing to sacrifice financial benefits in order to ensure the ultimate goal which usually is assisting the common good of the public. Although like any other businesses, some non-profit organizations have to deal with fraudulent activity as well as money hungry individuals. Non-Profit Organization So what exactly is a non-profit organization? The word non-profit invokes many sentiments that would often turn many inquirers in today’s money hungry society. However, there are many benefits affiliated with a non-profit organization both financial and otherwise. First let us properly define the term non-profit organization. According to UMUC library search a definition...
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...Profit vs. Non Profit Healthcare Organizations Prepared By: Milton Flores Table of Contents I. Introduction……………………………………………………………………………………………………………………………………3 II. Definition of Non Profit Health Care Organization………………………………………………………………………….4 III. Definition of Profit Health Care Organization…………………………………………………………………………………4 IV. Issues facing Non Profit and Profit Health Care Organizations……………………………………………………….5 V. Options to improve operations……………………………………………………………………………………………………….6 I. Introduction The debate on whether all healthcare institution should be non-profit rises many issues and they have been heavily debated. The best way to examine this to analyze if non-profit hospitals are in fact better that for profit hospitals and whether there is enough evidence data to support policies dictating ownership. Hospitals in the United States are the largest health care organization in this country. Private hospitals may either be classified as non-profit or for-profit institutions. The majority of the hospitals within the United States are non-profit. The main difference between non-profit and for-profit hospitals is the regulatory rules. Non-profit hospitals are not required to pay property, sales, or income tax. The reason that non-profit hospitals and other organizations were established was with the intention of servicing the needs of the poor. This is the reason that not-for-profit health care and hospitals are exempt from taxes, it was due to the...
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...Challenges of Managing Non-Profit Organizations There are different challenges a non-profit organization face, although I believe that these challenges are also faced by for profit organization at the same similar level. Trust is an issue that both non-profit and for profit organizations encounter at some point in their business, therefore transparency is very important. Transparency warrants organizations to provide clear statements of where their money goes, how it is utilized, and how it is making the organization accomplish their goals. These are not the only factors that are essential to make the stakeholders or anyone interested in the cause to trust the organization. For a non-profit organization trust is a key element to engage volunteers, donors and other business; without trust chances are that the organization might fail to achieve their mission by raising funds. Trust is acquire by performing the goals you have set for your mission and not deviating from it, at least not too far from achieving the organizations goals either for non-profit or for profit organization. It is also important to have a plan (Taylor-Hamm) in case there is a catastrophic event that might jeopardize your organization, it will help you foresee adverse situations and you will be better prepared in case your first plan fails. Performance challenges are faced in the same manner on both types of organizations non-profit and for profit organization. However they might be measured in a different...
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...Non-profit medical group Saint Thomas Physician Services (STPS) is a medical group based in Nashville, TN. STPS forms part of the Saint Thomas Health Network (STHS), which in turn belongs to one of the largest Catholic and non-profit systems in the United States, Ascension Health. Sources of revenue STPS is made of approximately 150 physicians who practice under one of the main two groups housed under STPS, Baptist Healthcare Group (BHG) and Saint Thomas Heart (STHT). While BHG houses physicians with different specialties and STHT strictly cardiologists, they both tend to the same type of patient, primarily the indigent. Although as a non-profit organization, STPS main mission is to serve those who are poor, the majority of its revenue still comes from third party payers (Barton, 2010). Financial information As a non-for-profit entity, STPS currently offers a 40% discount to all of their uninsured patients and if the patient is able to pay the balance at the time of service, he/she will receive an additional 20% discount. In addition to the previously mentioned incentives, STPS does have a charity program in place. In order for a patient to qualify for financial assistance he/she must have a credit score under 650 and fall below the federal poverty level. With this in mind, the Chief Financial Officer (CFO), who is responsible for the all the financial activities of the entity (Gapenski, 2012) requires reports that will help him project the dollar amount that will...
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...Running Head: Non-Profit to Profit Making Plan Non-Profit to Profit Making Plan Assignment Two Strayer University HSA 505 Health Services Strategic Marketing Non-profit and for-profit hospitals come with their own set of rules, regulations, and expectations. They both work financially differently and it is known that for-profit hospitals generate millions of dollars in revenue every fiscal year. This is not the same for non-profit hospitals. Non-profit hospitals work with what the state and federal government allots them and they do not make money hand over fist. The obvious motive for turning a non-profit hospital into a for-profit hospital is for money. This paper will address the external and internal factors that influence decisions, the theory and practical framework of data, market segmentation, and analyzing of data for the switch from non-profit to for-profit hospitals. Describe the external and internal factors that influence the executive team’s decision making and specify which might be most instrumental in making the decision to become a for-profit entity. Why do you think so? It is imperative to understand the differences of internal and external factors, especially in terms of decision-making due to the fact that a problem has to be recognized in order to establish a next crucial step. In this instance the next crucial step is the decision to move from a non-profit to a for-profit entity. Within this move both internal and external factors...
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...Profit = TR – TC How to increase profit: 1. Increasing the number of products sold (at the same price). 2. Increase the profit on each product sold (i.e. increase the per unit profit) – either by: * decrease per unit cost * increase price Gross profit Gross profit = Total Revenue- Variable Costs Net profit Net profit = Total Revenue – Total Cost Profit Margins The amount of total revenue (%) that is kept as profit. profit margins = profit / total revenue x 100 To increase profit margins, the firm needs to reduce costs or add value. Gross profit margins Gross profit as a % of total revenue. Gross profit margin = gross profit / TR x 100 Note – if VC fall, gross profit margins will increase. Net profit margin Net profit as a % of Total Revenue. Net profit margin = Net profit / TR x 100 Both VC and FC must fall for net profit margins to increase. 3 Ways of increasing profit margins: 1. Increase net profit margin / gross profit margin by reducing VC per unit. 2. Increase net profit margin by increasing price. 3. Increase net profit margin by reducing FC. Return on Capital Employed (ROCE) ROCE is the amount of profit gained from an investment as a % of the capital (finance) spent on an investment. ROCE = Net profit / Capital invested x 100 ROCE is used to see: * how profitable an investment is * how efficient management is How to increase ROCE 1. Increase profitability without investing any more capital. ...
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...A profit center is a section of a company treated as a separate business. Thus profits or losses for a profit center are calculated separately A profit center manager is held accountable for both revenues, and costs (expenses), and therefore, profits. What this means in terms of managerial responsibilities is that the manager has to drive the sales revenue generating activities which leads to cash inflows and at the same time control the cost (cash outflows) causing activities. This makes the profit center management more challenging than cost center management. Profit center management is equivalent to running an independent business because a profit center business unit or department is treated as a distinct entity enabling revenues and expenses to be determined and its profitability to be measured. Business organizations may be organized in terms of profit centers where the profit center's revenues and expenses are held separate from the main company's in order to determine their profitability. Usually different profit centers are separated for accounting purposes so that the management can follow how much profit each center makes and compare their relative efficiency and profit. Examples of typical profit centers are a store, a sales organization and a consulting organization whose profitability can be measured. Peter Drucker originally coined the term profit center around 1945. He later recanted, calling it "One of the biggest mistakes I have made." He later asserted that...
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