Determining Financial Viability
Determining Financial Viability
Accounting and finance are two different disciplines, which are commonly used on the same context to explain certain phenomena. Finance involves the planning the distribution of an organization’s assets and resources to enable the carrying out of certain transactions by the organization (Bamber ; Parry, 2014). Accounting, on the other hand, is the process of recording and reporting financial transactions, which impact an organization’s resources and assets. These two disciplines are important as they both deal with an organization’s assets and liabilities, which are important in planning and making future projections (Bamber ; Parry, 2014). Accounting focuses on past financial transactions where else finance focuses on future projections and acquisition of assets. These two fields are important as they are used by managers in the decision-making process. This is necessary in effectively managing an organization’s resources (Bamber & Parry, 2014).
This is important as a failure of this may lead to poor decisions, which may negatively an organization’s resources and its performance in achieving set goals and objectives. Both fields share the same information in making different decisions, which may impact either field (Gapenski, 2012). Finance and accounting also impact the short-term as well as the long-term financial viability of an organization. This is attributed to the fact that both fields deal with the finances of an organization which is important because it impacts the success or failure of any organization (Gapenski, 2012). Finance relies on accounting in making decisions that are related to the future of an organization. This would not be successful without information provided through accounting, which would lead to poor decisions. This also applies for accounting which uses financial information to analyze the organizational performance, which is used in making important decisions (Gapenski, 2012).
How Accounting and Finance Operate To Determine Financial Viability within a Healthcare Organization
Accounting and finance are important in determining financial viability within a healthcare organization in regards to the different projects undertaken by the organization. This is applied in the calculation of the financial viability of any project where accounting and finance are used to conduct an in-depth analysis (Harrison ; Harrison, 2013). This is important since healthcare projects are meant to provide funds to the organization, which requires an in-depth analysis of financial aspects to prevent the implementation of projects, which may result in losses or bring other negative effects to the organization (Harrison ; Harrison, 2013). The viability of these projects is determined when the benefits of implementing these projects outweigh the costs of the projects which is projected through finance and accounting disciplines. Finance can be used to determine the required resources for different projects where else accounting can be used to calculate the benefits as well as expense incurred by the projects (Harrison ; Harrison, 2013).
This makes it important for those involved to have knowledge on these two disciplines, which will positively impact their decisions. There are different aspects which surround the viability of a project which are out of reach of an organization’s control which include inflation and interest rates (Finkler, Calabrese, & Ward, 2019). These aspects are determined and calculated through accounting and financing disciplines. Without these two disciplines, this would not be possible which may lead to increased risks in implementing different projects (Finkler, Calabrese, & Ward, 2019). This makes it important for the integration of finance and accounting disciplines in determining the financial viability of different projects within a healthcare organization. These should also be used effectively to evaluate the cost, benefits, and other different aspects, which may impact a project in different aspects (Finkler, Calabrese, & Ward, 2019).
Bamber, M., & Parry, S. (2014). Accounting and Finance for Managers: A Decision-Making Approach. London: Kogan Page.
Finkler, S. A., Calabrese, T. D., & Ward, D. M. (2019). Accounting fundamentals for health care management. Burlington, MA: Jones & Bartlett Learning.
Gapenski, L. C. (2012). Healthcare Finance?: An Introduction to Accounting and Financial Management (Vol. 5th ed). Chicago, Ill: Health Administration Press.
Harrison, C., & Harrison, W. P. (2013). Introduction to health care finance and accounting. Australia: Delmar Cengage Learning.