Summary of financial management, all the literature and
video’s (2020-2021)
Week 1...................................................................................................................................................2
Chapter 1 ‘Background’..................................................................................................................2
Chapter 2 ‘Financial statements’....................................................................................................3
Chapter 3 ‘Balance sheet terms’.....................................................................................................6
Chapter 4 ‘Profit and loss account’.................................................................................................7
Chapter 5 ‘Measures of performance’............................................................................................8
Chapter 6 ‘Operating performance’................................................................................................9
Chapter 7 ‘Performance drivers’...................................................................................................11
Chapter 8 ‘Cash flow cycle’...........................................................................................................13
Chapter 9 ‘Liquidity’......................................................................................................................15
Chapter 10 ‘Financial Strength’.....................................................................................................17
Chapter 11 ‘Cash flow’..................................................................................................................18
Chapter 19 ‘Integrity of accounting statements’..........................................................................22
Appendix 1 EBITDA (p. 346 – 347)................................................................................................29
Benchmark Dutch Healthcare 2019..................................................................................................30
Chapters 2 ‘top clinical hospitals’.................................................................................................30
Chapter 3 ‘general hospitals’........................................................................................................30
Kennisclip ‘Het driepotige krukje’ (Dutch, video from ‘bedrijfseconomie’)......................................31
Week 2.................................................................................................................................................36
Online learning module – Health Economics....................................................................................36
Terminology..................................................................................................................................36
Organisational structure...................................................................................................................42
Video one ‘What is a organizational structure?’...........................................................................42
Video two: Market business News Video Dictionary – NL What is Organizational structure?......42
Fundamentals of Management Control systems..............................................................................44
Video three: Rutgers Accounting Web – Management Control....................................................44
Video four: Paulino Silva – Management Control Systems...........................................................47
Extra video (not mandatory).........................................................................................................47
Management control or Decision-Making........................................................................................48
Video five: WHU on controlling – Management control – simple over complex?........................48
Decentralized Decision Making........................................................................................................48
Video six: Tom Malone: decentralized Decision Making...............................................................48
Week 3.................................................................................................................................................49
1
, Franco-santos, M. et al. (2012) Contemporary performance measurement systems: a review of
their consequences and a framework for research..........................................................................49
Week 4.................................................................................................................................................58
Better ways to pay for healthcare....................................................................................................58
Week 5 & 6...........................................................................................................................................62
Week 1
Walsh, C. (2008). Key management ratios: The clearest guide to the
critical numbers that drive your business.
Chapter 1 ‘Background’
The book is a lot about ratios: By definition the ratios show the connections that exist between
different parts of the business. They highlight the important interrelationships and the need for a
proper balance between departments. A knowledge of the main ratios, therefore, will enable
managers of different functions to work more easily together towards overall business objectives.
The manager will, of course, understand that the financial numbers are only a reflection of
what is actually happening and that it is the reality not the ratios that must be managed
! The approach taken in this book is to ignore many ratios initially in order to concentrate on the few
that are vital. These few, perhaps 20 in all, will be examined in depth
Many statements will be made that are 95 percent true – the 5 percent that is left unsaid
being of importance only to the specialist.
Golden rule: ‘’All commercial enterprises use money as a raw material which they must pay for.
Accordingly, they have to earn a return sufficient to meet these payments. Enterprises that continue
to earn a return sufficient to pay the market rate for funds usually prosper. Those enterprises that fail
over a considerable period to meet this going market rate usually do not survive – at least in the same
form and under the same ownership.’’
Assets, Profits, Growth and cash flow There is a balance that can be maintained between them
and, from this balance, will come corporate value.
Corporate value is the reason for more business activity and thus this book focuses on the
business ratios that determine corporate value.
2
,Chapter 2 ‘Financial statements’
This chapter focusses on the components to get a coherent view of how a business performs.
One of the main aims here will be to show the common sense and logic that underlies all the
apparent complexity.
Three main documents from which we obtain raw data:
1. The balance sheet (assets vs funds/liabilities)
= an instant ‘snapshot’ of the assets used by the company and of the funds that are related
to those assets. The balance sheet can be looked on as an engine with a certain mass/weight
that generates power output in the form of profit you can use the power/weight concept
to look at how a balance sheet of a given mass of assets must produce a minimum level of
profit to be efficient.
Assets: a list of items of value owned by the business
It’s value at their present cost to the company. It can be looked on as a list of items of
continuing value on which money has been used or spent.
Liabilities: lists amounts from parties external to the company, including the owners.
The two amounts balance each other out: it’s the same
! It is important to note that the balance sheet does not attempt to reflect the market value of either
the separate assets or the total company.
A balance sheet has 5 boxes:
o Within assets:
- Fixed assets: long-term
Intangibles (all assets that do not have a physical presence), net fixed assets (Large,
expensive, long-lasting, physical items required for in the operations of the business are
included here; you take accumulated depreciation into account) and long-term
investments (include long-term holdings of shares in other companies for trading
purposes; It is only investments in non-consolidated companies)
- Current assets (CA): short term (they will normally convert back into cash quickly, i.e. in a
period of less than 12 months). Four headings: inventories (stocks), accounts receivable
(trade debtors), cash, miscellaneous current assets. The items are in constant movement,
3
, e.g. inventories of raw materials are converted into finished good and when sold are
transformed in accounts paid in cash to the company.
The two significant items in current assets therefore are the inventories and accounts
receivable. They are very important assets that often amount to 50 percent of the total
balance sheet of the company. Miscellaneous is often low; the amount of cash held is often
small, when it’s large there is usually a good reason like a planned acquisition.
o Within liabilities
- Owners funds (OF)
Most exciting part: here are fortunes made and lost. For the newcomer to the subject
the most important thing to remember is that the total in the box is the figure that
matters, not the breakdown between many different entries.
Capital reserves: to cover all surpluses accruing to the common stockholders that have not arisen
from trading (mean sources: revaluation of fixed assets, premiums on shares issued at a price in
excess of nominal value & currency gains on balance sheet items, some non-trading profits, etc.)
A significant feature of these reserves is that they cannot easily be paid out as dividends.
4
video’s (2020-2021)
Week 1...................................................................................................................................................2
Chapter 1 ‘Background’..................................................................................................................2
Chapter 2 ‘Financial statements’....................................................................................................3
Chapter 3 ‘Balance sheet terms’.....................................................................................................6
Chapter 4 ‘Profit and loss account’.................................................................................................7
Chapter 5 ‘Measures of performance’............................................................................................8
Chapter 6 ‘Operating performance’................................................................................................9
Chapter 7 ‘Performance drivers’...................................................................................................11
Chapter 8 ‘Cash flow cycle’...........................................................................................................13
Chapter 9 ‘Liquidity’......................................................................................................................15
Chapter 10 ‘Financial Strength’.....................................................................................................17
Chapter 11 ‘Cash flow’..................................................................................................................18
Chapter 19 ‘Integrity of accounting statements’..........................................................................22
Appendix 1 EBITDA (p. 346 – 347)................................................................................................29
Benchmark Dutch Healthcare 2019..................................................................................................30
Chapters 2 ‘top clinical hospitals’.................................................................................................30
Chapter 3 ‘general hospitals’........................................................................................................30
Kennisclip ‘Het driepotige krukje’ (Dutch, video from ‘bedrijfseconomie’)......................................31
Week 2.................................................................................................................................................36
Online learning module – Health Economics....................................................................................36
Terminology..................................................................................................................................36
Organisational structure...................................................................................................................42
Video one ‘What is a organizational structure?’...........................................................................42
Video two: Market business News Video Dictionary – NL What is Organizational structure?......42
Fundamentals of Management Control systems..............................................................................44
Video three: Rutgers Accounting Web – Management Control....................................................44
Video four: Paulino Silva – Management Control Systems...........................................................47
Extra video (not mandatory).........................................................................................................47
Management control or Decision-Making........................................................................................48
Video five: WHU on controlling – Management control – simple over complex?........................48
Decentralized Decision Making........................................................................................................48
Video six: Tom Malone: decentralized Decision Making...............................................................48
Week 3.................................................................................................................................................49
1
, Franco-santos, M. et al. (2012) Contemporary performance measurement systems: a review of
their consequences and a framework for research..........................................................................49
Week 4.................................................................................................................................................58
Better ways to pay for healthcare....................................................................................................58
Week 5 & 6...........................................................................................................................................62
Week 1
Walsh, C. (2008). Key management ratios: The clearest guide to the
critical numbers that drive your business.
Chapter 1 ‘Background’
The book is a lot about ratios: By definition the ratios show the connections that exist between
different parts of the business. They highlight the important interrelationships and the need for a
proper balance between departments. A knowledge of the main ratios, therefore, will enable
managers of different functions to work more easily together towards overall business objectives.
The manager will, of course, understand that the financial numbers are only a reflection of
what is actually happening and that it is the reality not the ratios that must be managed
! The approach taken in this book is to ignore many ratios initially in order to concentrate on the few
that are vital. These few, perhaps 20 in all, will be examined in depth
Many statements will be made that are 95 percent true – the 5 percent that is left unsaid
being of importance only to the specialist.
Golden rule: ‘’All commercial enterprises use money as a raw material which they must pay for.
Accordingly, they have to earn a return sufficient to meet these payments. Enterprises that continue
to earn a return sufficient to pay the market rate for funds usually prosper. Those enterprises that fail
over a considerable period to meet this going market rate usually do not survive – at least in the same
form and under the same ownership.’’
Assets, Profits, Growth and cash flow There is a balance that can be maintained between them
and, from this balance, will come corporate value.
Corporate value is the reason for more business activity and thus this book focuses on the
business ratios that determine corporate value.
2
,Chapter 2 ‘Financial statements’
This chapter focusses on the components to get a coherent view of how a business performs.
One of the main aims here will be to show the common sense and logic that underlies all the
apparent complexity.
Three main documents from which we obtain raw data:
1. The balance sheet (assets vs funds/liabilities)
= an instant ‘snapshot’ of the assets used by the company and of the funds that are related
to those assets. The balance sheet can be looked on as an engine with a certain mass/weight
that generates power output in the form of profit you can use the power/weight concept
to look at how a balance sheet of a given mass of assets must produce a minimum level of
profit to be efficient.
Assets: a list of items of value owned by the business
It’s value at their present cost to the company. It can be looked on as a list of items of
continuing value on which money has been used or spent.
Liabilities: lists amounts from parties external to the company, including the owners.
The two amounts balance each other out: it’s the same
! It is important to note that the balance sheet does not attempt to reflect the market value of either
the separate assets or the total company.
A balance sheet has 5 boxes:
o Within assets:
- Fixed assets: long-term
Intangibles (all assets that do not have a physical presence), net fixed assets (Large,
expensive, long-lasting, physical items required for in the operations of the business are
included here; you take accumulated depreciation into account) and long-term
investments (include long-term holdings of shares in other companies for trading
purposes; It is only investments in non-consolidated companies)
- Current assets (CA): short term (they will normally convert back into cash quickly, i.e. in a
period of less than 12 months). Four headings: inventories (stocks), accounts receivable
(trade debtors), cash, miscellaneous current assets. The items are in constant movement,
3
, e.g. inventories of raw materials are converted into finished good and when sold are
transformed in accounts paid in cash to the company.
The two significant items in current assets therefore are the inventories and accounts
receivable. They are very important assets that often amount to 50 percent of the total
balance sheet of the company. Miscellaneous is often low; the amount of cash held is often
small, when it’s large there is usually a good reason like a planned acquisition.
o Within liabilities
- Owners funds (OF)
Most exciting part: here are fortunes made and lost. For the newcomer to the subject
the most important thing to remember is that the total in the box is the figure that
matters, not the breakdown between many different entries.
Capital reserves: to cover all surpluses accruing to the common stockholders that have not arisen
from trading (mean sources: revaluation of fixed assets, premiums on shares issued at a price in
excess of nominal value & currency gains on balance sheet items, some non-trading profits, etc.)
A significant feature of these reserves is that they cannot easily be paid out as dividends.
4
