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When analyzing a healthcare organization, which metric would be most useful for an investor: operating income,...

When analyzing a healthcare organization, which metric would be most useful for an investor: operating income, net income, or cash flows from operations? Explain your answer.(300 words)

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Answer #1

As an investor, the most important aspect that should be considered is to understand how much is the business earning from its operations . This can be estimated based on the cash flows from operations. The operations of a hospital is the number of in-patients and out-patients, the revenue earned from the treatment's expenses etc. This will give the actual picture of the financial performance of the healthcare organization. The investors will then be able to take a wuse decision whether they want to invest their money in the healthcare organization or not. If the organization has been earning well from its operations then the investors can expect to earn well in future and vice versa. So, analysing the cash flows from operations is the best option for the investor.

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