Effective Methods for Cash Flow Analysis, Article Critique Example

This article is important for financial managers to use when planning and controlling of cash flows, which is done in organizations, because it provides concise ways of interpreting and  evaluating their statements of cash flows. In addition, this promotes growth and effectiveness of balance sheets and statements of reconciliations for organizational activities. The authors have given a thorough description of how the methods of analysis affect managerial decisions in relation to financial matters and thus, give an insight on how to curb existing financial problems in a healthcare organization.

Managers of healthcare facilities use financial information for purposes of interpretation and evaluation by using statements of cash flows, which help in making decisions for cash flow planning and controlling. Some of the common, comparative analysis applied includes trend, ratio and common-sized analysis. From the article, it is evident that the most effective methods of cash flow analysis helps financial managers curb problems pertaining to operating performances, objectives of investing and financial activities. Effectiveness, growth and payments of obligations in making financial decisions are subject to the correct interpretation and evaluation, by financial managers, of SCF.

Cash flow reporting concerns the use of both direct and indirect methods of reconciliation provided by operating activities in the organization. The method discussed gives an overview of how financial managers should treat financial problems existing in the organization, as a result, of poor management of operating costs and making decisions during planning and controlling of cash flows. It is imperative for financial managers to adhere to all rules of accounting, since it reflects on future performance of the organization and reduces the chances of cash errors.

In conclusion, the information provided y the article is helpful for financial managers since it relates to problems associated with cash flows. Additionally, this hampers decision-making processes and effective running of business activities in the organization. Therefore, it is important to determine which method of analysis best suits the organization and apply them to minimize chances of making financial errors.

Reference

Sylvestre, J & Urbancic, FA. (1994). Effective methods for cash flow analysis. Healthcare Financial Management, vol. 48, no. 62, 64-67, 69-72.