Primary difference between financial statement analysis

  1. What is the primary difference between financial statement analysis and operating indicator analysis? Why are both types of analyses useful to health services managers and investors? Should financial statement and operating indicator analyses be conducted only on historical data? Explain your answer.
  2. Define Key Performance Indicators (KPI) and dashboards. What is their value? How are KPIs and dashboards used in financial condition analysis?
  3. What is Economic Value Added (EVA), and how is it measured? Why is EVA a better measure of financial performance than are accounting measures such as earnings per share and return on equity? What does EVA tell managers about how to achieve good financial performance?
  4. The interest rate required by investors on a debt security can be expressed by the following equation: Interest rate = RRF + IP + DRP + LP + PRP + CRP. Define each term of the equation, and explain how it affects the interest rate.
  5. What are the three major rating agencies? What are some criteria that the rating agencies use when assigning ratings? What impact do bond ratings have on the cost of debt to the issuing firm?

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