Instructions Assessment #1:  Understanding an Income Statement 

 Instructions

Assessment #1:  Understanding an Income Statement

You are an intern in a health care organization business office. Find an example of an income statement for a health care organization online and using the resources you have been provided under course content, please develop a 4-6 page paper responding to the following questions regarding the income statement:

1. What is an income statement used for?

2. What are the key components of an income statement?

3. On your example of an income statement, is the organization making a profit or loss? How much is that profit or loss? Show the calculations. (Total Revenues – Total Expenses = Net Profit/Loss)

4. On your example of an income statement, what is the “contribution margin”? Show the calculations.  (Total Revenue – Variable Costs=Contribution Margin). You can use the assumption that volume is 15,000 if not included in financial statements.

5. What three financial indicators does a contribution margin help determine? How?

6. What is a break-even analysis? What is the break-even point for this organization? Show the calculations.  (Total revenues – Total VC – FC= Profit)

7. How does a break-even analysis vary between fee-for-service and capitated payments? Explain it using the income statement you chose. What are similarities and differences applicable to the Income statements in fee-for-service and capitated payment options?

The paper should not be more than 6 pages and should follow APA format, spelling and grammar. Include a cover page and reference page (not included in the page count). Make sure to properly cite and reference all the used sources. The calculations need to be shown as formulas using figures. Follow the mathematical rules while calculating numbers.