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What is the primary difference between financial statement analysis and operating indicator analysis? Why are both...

What is the primary difference between financial statement analysis and operating indicator analysis?
Why are both types of analyses useful to health services managers?

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Answer #1

Financial statement analysis is prepared on the basis of information contained in a business’s financial statements with the goal of assessing financial condition of the business. It includes use of ratio analysis, DuPont analysis, common size analysis, percentage change analysis.

Operating indicator analysis helps to focus on operating data with the aim of explaining financial performance.

In healthcare, financial statement analysis help analyze company's performance based on financial statement as to how they are performing over the years. Operating indicator helps analyze it with industry benchmarks to see how competitive they are in comparison. Health service managers should try and better industry benchmarks.

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