Essay On Banner Healthcare Financial Analysis

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Banner Healthcare Financial Analysis

This is a healthcare organization located in the United States and operates over 20 hospitals across the nation. Banner HealthCare is a large organization and is 2nd largest in Arizona after Walmart. It has a mission strategy that directs its strategies as well as objectives. Its mission statement is “We exist to make a difference in people’s lives through excellent patient care” (Banner Health, 2014). The main objective of Banner HealthCare is to provide health services to people.

Therefore, all its efforts should be geared towards achieving this fate. The health organization is nonprofit making. However, the organizations earnings are significantly high. For instance, in the year 2010, the company reported revenues worth $4.9 billion. The revenues in the year 2013 amounted to $5 billion while that in the year 2014 was $5.4 billion (EY, 2015). This article will analyze the financial reports of Banner Health for the year ended December 2014.

Financial Analysis for Banner health

In the year 2014, the organization made total revenue of $5,397,871 billion. This was an increase from the revenue of $5,097,004 billion it had generated in the year 2013. The total expenses for the year 2014 were $5,134,603 while that of the year 2013 was $4,842,904 (EY, 2015). This is an indication that the organization spent more money to generate income in the year 2014. The excess revenues for the year 2014 were less as compared to the totals in the year 2013. This was caused by the little money realized from investments as well as the increased level of expenses. Excess revenue attributable to Banner Health was $238,335 in the year 2014, down from $833,395 in the year 2013 (EY, 2015).

The total current assets for the year 2014 increased to $1,401,737 from $1,383,922 in the year 2013. The organization invested more on current assets in the year 2014 hence the increase. Net assets for the year also increased to $4,603,367. The general implication is that the organization grew in value in the year 2014 (EY, 2015). This is because the assets increased as well as the profitability. The cash flow for the year 2014 was also high. This means that the level of activities in the organization was high during the year. At the beginning of the year, Banner health had cash and cash equivalents totaling to $133,349. By 31st December year 2014, cash and cash equivalents were $67,318. At the beginning of 2013, the cash, and cash equivalents was equal to $54,734 (EY, 2015).

The reports that will be needed

There are some financial reports that should be presented by any organization according to International Reporting Standards (IRS). As per the IRS, Banner health needs to present the reports on income statements. It should also report on the financial position, the cash flow for the year as well as changes in assets during the year. The income statement report explains or gives information on the revenues that the organization generated.

This includes revenues from the various sources of income that the company has. The sources of income could be categorized based on their nature. For instance, there is income from operating activities, income from investments, income from sale or disposal of assets as well as other incomes as may be specified. The report should explain these incomes and give specific details where the need may arise (Gibson, 2011).

The income statement reports also give an explanation on the expenses incurred by the organization during the financial year. Just like in the case of revenue, expenses can be categorized based on their nature. There could be operating expenses, administrative expenses and losses on investment among others.

The report should also specify in the event that there is any other activity that contributed to the profits (the excess of revenue over expenses). The difference between the total revenues and the total expenses gives the excess/surplus of revenue. It should also be noted that the income statement reports also gives information on interests, taxes and any other deductions or allowances that have an effect on the profit.

The other report is the financial position also referred to as the balance sheet. This is a report that gives the position of the organization in reference to assets and liabilities. It gives information regarding the changes in values of assets (Gibson, 2011). This includes depreciation in the case of non-current assets. The net book value of the asset is given in the balance sheet. The report also gives information on liabilities. Any increases or decreases on liabilities can be depicted on the statements. It is important to note that the value of the total assets should be equal to the total value of liabilities.

The items that should be included in the balance sheet include the current assets. These are assets such as stock, cash in hand and cash at bank, receivables, short-term investments, accrued expenses, and financial documents. Also, the reports should include the non current assets. These are assets such as plant and machinery, buildings, land and vehicles among others. Their values should be clearly indicated on the report as well as their rates of depreciation and the depreciated values. Liabilities are the other items that should be included on the balance sheets. These include payables, short and long term loans, and deferred expenses among others. The capital amount should also be included in the report (Gibson, 2011).

The statement of changes in assets is a statement that shows the movement on assets. In other words, it shows additions and decrease on assets. Any asset that is purchased is shown on this statement. Similarly, the assets that are disposed of are also recorded and reported on this statement. It is imperative to note that any gains or losses on disposal of an asset can also be reported on the statement.

Finally, the cash flow statement is a statement that shows the movement of cash in the organization. It is in three parts namely, operating activities, investment activities, and the financing activities. The first part contains items/activities that contribute to the movement of operating cash. Any outflow is reduced while the inflow is added (Gibson, 2011). Investment activities include sale and purchase of assets or capital investments. The financing activities, on the other hand, are the activities that finance the organization. They include acquisition and payment of loans among other financing activities.

Impact of Contractual Obligations

These are obligations that require a health organization to enable them offer high-quality services. Medicare and Medicaid, for instance, are contractual obligations that offer insurance covers to patients. The contracts involve some insurance companies that offer health covers. The health organizations are obliged to offer the health services to the patients as per the arrangements with the insurance companies.


Financial reporting is one of the most important activities in any organizations whether profit-making or non-profit making. This is because financial reporting and analysis help the organization to understand its position and its performance. This is important when it comes to planning, strategizing and decision making. The organization can lay strategies on how it can achieve its goals and targets. In fact, financial analysis is used by the organization to benchmark itself. The financial analysis also helps in understanding the real value of the organization. It gives the value of assets as well as the value of liabilities. An organization should be in a position to give the various reports as required by the IRS.


Banner Health, (2014), Our Mission, Values, Vision and Brand, Banner Health,
EY (2015), Consolidated Financial Statements, Banner Health and Subsidiaries, Accessed online on June 10, 2015
Gibson, C. H. (2011). Financial reporting & analysis: Using financial accounting information. Mason, Ohio: South-Western.