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Financial Terminology and Health Care Finance

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Locate at least two articles about one of these financial terms: balance sheet, shareholder's equity, EBITDA, EBITDAM, financial ethics, financial benchmarking, financial trend analysis, and ratio analysis.

Write a 1,000- to 1,400-word paper discussing the financial term you have chosen and its application to health care finance. Your paper must include:

A brief summary of the articles
An explanation of the financial term
A discussion of the term's application to health care finance
Include at least five peer-reviewed references
Format your paper according to APA 6th standards

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Solution Summary

Ratio analysis is explained in a structured manner in this response. The answer includes references used.

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The financial term selected is ratio analysis.

A brief summary of the articles
The first article says that academics are seeking to eliminate ratio analysis as an analytical technique in assessing the performance of a business. According to the article theorists are attacking the relevance of ratio analysis. The article explores the possibility if the gap between traditional ratio analysis and more rigorous statistical techniques can be bridged. According to the article the traditional ratio analysis is no longer and important analytical technique in the academic environment because of the unsophisticated manner in which it has been presented. The research combined financial ratios with discriminate analysis to the problem of corporate bankruptcy prediction. The article concludes that if the ratios are analyzed within a multivariate framework they take on greater statistical significance than ratio comparisons (Altman . E, 1968),.
The second article provides a review of theoretical and empirical basis of four central areas of financial ratio analysis. The research areas reviewed are the functional forms of financial ratios, distributional characteristics of financial ratios, classification of financial ratios, and estimation of the internal rate of return from financial statements. The article finds that of the four areas reviewed only the functional forms of financial ratios and distributional characteristics of financial ratios are closely interrelated. The article asserts that proportionality, an assumption for financial ratios, is stronger within an industry than between industries. According to this article proportionality varies between time periods and between ratio to ratio. The article asserts that financial ratio analysis is not stable across different ratios, industries, and time periods (Salmi. T & Martikainen. T, 1994).

An explanation of the financial term
The financial ratio is also called accounting ratio is the relative ...

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  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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