Review the income statement provided in Table 8.2 and address the following questions:

a. From your analysis, you understand that the net margin for the organization has shown strong growth over the past year. What factor/s is/are driving this improved performance?

b. What concerns do you have regarding current financial performance of this organization? As an executive leader within this organization, what priority issues should this organization address?

c. Is your impression of the reported financial performance generally favorable or unfavorable? Why?

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TABLE 8.2 Income Statement (Profit and Loss) ($ in 000s) 3/20 Gross Patient Revenues Routine services Inpatient ancillary Outpatient ancillary Other revenue Total Gross Revenue Deductions from Revenue Bad debt Government allowance DRG Insurance contracts managed care Charitable allowances Total Deductions Operating Revenue 3/19 Change $150,000 $142,500 $7,500 $62,500 $49,350 $13,150 $118,000 $96,500 $21,500 $2,500 $2,150 $350 $333,000 $290,500 $42,500 $18,000 $21,500 $3,500 $71,000 $60,800 ($10,200) $35,400 $38,400 $3,000 $13,600 $12,500 ($1,100) $138,000 $133,200 ($4,800) $195,000 $157,300 $45,700 1-Year growth (%) 15 127 122 16 115 16 17 18 19 14 24%