Understanding an Income Statement

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?

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