Balance Sheets, Income Statements And Statements Of Cash Flow (Page 5 of 5) in pdf

Feature

The State of Statements

adjustments in practice operations for man-

agement purposes.

Epilogue

Although these statements are extremely

useful,as indicated by Freeman (2000),these

data are simply numbers. To unlock the real

information in these statements, it is

necessary to conduct liquidity, activity and

leverage (debt) ratio calculations. Although

these can be conducted on all of the state-

ments, the ratios of primary importance

are conducted on the balance sheet and

income statement data. These financial

accounting ratios can give the practitioner

powerful information about whether there

are adequate funds to pay the bills, how

long it takes to turn the accounts receivable

and provide meaningful information as to

the debt of the practice. In the next issue

of Feedback, the continuation of this topic

will discuss the calculation of some impor-

tant ratios that can influence the manage-

ment of the practice as they are tracked

from month to month, quarter to quarter,

and year to year. ■

Table 3: Statement of Cash Flows (Traynor, 2008)

can be compared to the current period for

Flows reviews Income generated from

Robert G. Glaser, Ph.D., FAAA, is the owner

analysis. In Table 3, the cash flow statement

investing activities. This section includes

of Audiology Associates of Dayton, Inc., a mul-

is divided into three general sections, Cash

transactions and events involving the pur-

ti-office, independent practice providing a full

Flow From Operating Activities, Cash Flow

chase and sale of equipment,securities,land,

range of audiologic, neurodiagnostic and hearing

from Investment Activities and Cash Flow

buildings,and other assets not generally held

and balance rehabilitative services for children and

from Financing Activities. The Operating

in the practice for resale. This area of the

adults. Dr. Glaser is widely known for his inno-

vative business approach to the profession through

Activity section begins with the Net Income

statement also covers the making and col-

writings, presentations and seminars across the

(taken from the Income Statement,Table 2)

lecting of loans, if the practice internally

country. He is the principal owner of the Auris

and includes all transactions and events that

finances products and services these loans to

Group, a practice management consulting firm

are normally entered to determine the oper-

consumers internally.Investing Activities are

serving health care practices and practitioners in

ating income. These entries include cash

not classified as operating activities since

audiology,medicine and allied health care practices.

receipts from selling goods or providing serv-

they have an indirect relationship to the cen-

ices, as well as income earned as interest and

tral, ongoing operation of the practice.

Robert Traynor,Ed.D.,MBA is CEO and prac-

dividends, if the practice has investments.

Transactions within the third section record

ticing audiologist at Audiology at Audiology

Cash Flow From Operating Activities also

Cash Flows from Financing Activities and

Associates,Inc.,Greeley and Johnstown,Colorado

includes additions or deductions of items

deal with the flow of cash between the prac-

with particular emphasis in amplification and

affect cash such as depreciation, increase (or

tice,the owners (stockholders),and creditors

operative monitoring offering all general audio-

decrease) in accounts receivable,merchandise

as well as the cash proceeds from issuing

logical services to patients of all ages. An Associate

inventory and liabilities, resulting in the

capital stock or bonds if applicable. For

Affiliate Professor at the University of Colorado

Net Cash used by Operating Activities. The

example,if there was a need to transfer prof-

Health Sciences Center and the University of

Northern Colorado,each academic session he con-

Net Amount of Cash Provided (or used) by

it from the practice to the owners or from

tinues to teach doctoral level Audiology students

practice operating activities is the key figure

the owners (or creditors) into the practice,

as an Adjunct Professor of Audiology at the

on a Statement of Cash Flows. The

it would be reflected in the Cash Flows from

University of Florida,Gainesville and the PCO

Operations Section is of the most interest

Financing Activities section. Careful review

School of Audiology in Elkins Park, PA. A

since it presents the specific areas of the prac-

of the Statement of Cash Flows can offer

practice manager for over 35 years,Dr.Traynor has

tice where cash was consumed by the run-

valuable information to the practitioner as to

lectured on most aspects of the field of Audiology

ning of the practice.

where the cash generated actually goes and

in over 40 countries including the United States.

The second section of a Statement of Cash

presents an invaluable opportunity to make

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2008

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Balance Sheets, Income Statements And Statements Of Cash Flow Page 5

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